Bangladesh’s Leather Industry: Charting a Sustainable Export Future

by C. Basu · Published August 7, 2025 · Updated August 7, 2025

Bangladesh’s leather industry is the nation’s second-largest export earner, holding a 3% global market share and meeting nearly 10% of worldwide leather demand. The government designates it a priority sector. In 2024, exports reached $1.5 billion, growing 45% year-on-year, with targets of $5 billion in five years and $10 billion by 2035.

From July 2024 to May 2025, total leather exports rose to $1.06 billion (12.55% increase). This growth is primarily footwear-driven: leather footwear surged 28.96% to $620.17 million, and non-leather footwear rose 30.25% to $494.28 million. In contrast, leather goods declined by 3.39% to $317.87 million, and finished leather fell by 7.82% to $119.78 million. This highlights footwear’s strong performance while other segments struggle.

The dysfunctional Central Effluent Treatment Plant (CETP) at Savar is a critical bottleneck, hindering Leather Working Group (LWG) certification. This compliance gap costs an estimated $500 million annually in potential export revenue. Other challenges include poor raw hide management, technological gaps, and new international regulations like REACH and the EU Deforestation Regulation (EUDR).

Opportunities lie in shifting to higher-value finished products, adopting eco-friendly tanning, improving waste management, and exploring plant-based leather alternatives. Increased foreign investment, workforce skill enhancement, and digital transformation are crucial for realizing Bangladesh’s full potential.

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Bangladesh’s Leather Industry: A Rich Heritage, A Dynamic Present

From Tradition to Trade: Evolution and Current Landscape

Bangladesh’s leather industry began in the 1940s. A 1991 ban on wet-blue leather exports aimed to boost domestic value addition. Today, around 113-155 of 220 tanneries are operational. The sector includes 3,500 SMEs and 110 large firms, employing about 850,000 people, with women comprising 60% of the footwear workforce. The government designates it a “priority sector”.

Global Footprint, Local Strength

Bangladesh ranks 18th in global footwear and holds a 3% share of the world leather market, meeting nearly 10% of global demand. Annual leather production is 180-350 million square feet, with over 80% exported. Abundant local raw materials (90% domestic), especially Black Bengal goat skins, offer up to 90% value addition potential for finished products. However, much is still exported semi-finished, missing higher value opportunities.

Table 1: Bangladesh Leather Sector at a Glance (Key Production & Employment Metrics)

Metric	Data Point
Number of Tanneries (Numerical)	214-220
Number of Tanneries (Effectively Operational)	113-155
Number of SMEs (Leather Products)	3,500
Number of Large Firms (Leather Products)	90-110
Annual Leather Production	180-350 million sq ft
Annual Footwear Production	378 million pairs
Total Employment (Direct & Indirect)	~850,000 people
Percentage of Women in Workforce (Footwear)	60%
Share in Global Leather Market	3%
Local Raw Material Availability	90%
Value Addition Potential (Processed/Finished)	Up to 90%

Export Performance: Trends, Destinations, and Product Dynamics

Decade of Exports: Trends and Dynamics

Bangladesh’s leather exports show growth, stagnation, and recent footwear-driven resurgence. The sector aimed for $5 billion by 2021, but exports dipped to $1 billion in 2018-19. FY 2021-22 saw recovery to $1.245 billion (32.23% growth). However, 2023 experienced a 16.02% decline to $1.107 billion.

From July 2024 to May 2025, total leather exports rebounded to $1.06 billion (12.55% increase). This is largely due to footwear: leather footwear surged 28.96% to $620.17 million, and non-leather footwear rose 30.25% to $494.28 million. In contrast, leather goods declined 3.39% to $317.87 million, and finished leather fell 7.82% to $119.78 million. Footwear is the primary growth engine.

Table 2: Bangladesh Leather & Leather Products Export Performance (FY 2018-2025)

Fiscal Year	Total Leather & Leather Products Export (USD Million)	Leather Export (USD Million)	Leather Goods Export (USD Million)	Leather Footwear Export (USD Million)	Non-Leather Footwear Export (USD Million)	Year-on-Year Growth (%)
FY 2018-19 (July-Nov)	626.57	80.61	184.73	252.81	108.42	-1.47 (overall)
FY 2021-22 (July-June)	1,245.18	151.37	337.62	756.18	449.15	32.23 (overall)
CY 2023 (Jan-Dec)	1,107.35	–	–	–	–	-16.02 (overall)
FY 2023-24 (July-May)	939.9	–	317.87	620.17	494.28	–
FY 2024-25 (July-May)	1,060.00	119.78	317.87	620.17	494.28	12.55 (overall)

Note: Data points for individual categories may not sum up to total due to variations in reporting periods and data availability across sources.

Mapping the Markets: Global Reach

Bangladeshi leather and footwear reach over 50 countries, including India, Dubai, UK, Germany, Italy, Russia, Canada, Australia, and Japan. The US is a key market for leather footwear, with exports surging 64.40% to $451.40 million in 2022, driven by US buyers diversifying from China and Vietnam (“China Plus One” strategy). In 2023 (Jan-May), India surpassed the US as the top market for Bangladesh’s leather apparel and accessories ($38.88 million vs. $34.43 million). Europe remains a major market for leather goods (37.44% global share), with Italy a significant importer of Bangladeshi leather handbags.

The Roadblocks Ahead: Critical Challenges to Overcome

Environmental Compliance: The Savar CETP Crisis

The Savar Tannery Industrial Estate (TIE) Central Effluent Treatment Plant (CETP) is largely dysfunctional, processing only 14,000 cubic meters of waste daily against a 35,000 cubic meter peak, causing severe Dhaleshwari River pollution. This prevents most tanneries from gaining Leather Working Group (LWG) certification, a prerequisite for major markets. This compliance gap costs an estimated $500 million annually in potential export revenue. Only a handful of Bangladeshi tanneries are LWG-certified, unlike hundreds in India and Pakistan. LWG has suspended certification for facilities connected to the Savar CETP. This forces sales to low-cost buyers at 20-60% reduced prices, hindering investment.

Table 4: LWG Certified Tanneries in Bangladesh (Status & Location)

Company Name	LWG Rating	Certification Date	Location	Leather Types Produced	Animal Types Processed
Apex Footwear	–	2015	–	–	–
RIFF Leather	–	2020	–	–	–
ABC Leather	–	2021	–	Crust & Finished Leather	–
Superex Leather	–	2023	–	–	–
SAF Industries Limited	★★★★☆ (Gold)	2023	Savar	Full grain, Lining, Sole/Belt/Strap, Split, Suede	–
Simona Tanning Inc. (Bangladesh)	Gold	Nov 25, 2023	Savar (BSCIC Tannery Estate)	Full grain, Nubuck	Cow

Note: LWG has suspended certification for facilities connected to the Savar CETP due to ongoing issues. Simona Tanning Inc. (Bangladesh) is listed as Gold certified at a Savar address, indicating it operates independently or meets specific criteria despite general CETP issues.

Rawhide Quality and Supply Chain Inefficiencies

Bangladesh, a large raw hide producer (350 million sq ft annually), faces significant quality issues. During Eid-ul-Azha, poor coordination, inadequate preservation, delayed transport, and insufficient storage cause 10-20% wastage. A 2025 study showed 21% of hides sold 43% lower due to unskilled skinning (“flay cuts”). Lack of a national policy and cold storage facilities further degrade hide quality, increasing costs and damaging reputation.

Technological Gaps and Modernization Pace

The industry suffers from significant technological gaps and slow modernization. Many firms use outdated, manual processes, limiting efficiency and access to modern machinery. Industry 4.0 adoption faces barriers like high costs, lack of knowledge, and resistance to change. Automation is slower in leather than in RMG, hindering global competitiveness.

Navigating Global Regulations: REACH and EUDR

Bangladeshi leather exports face strict EU regulations. REACH restricts hazardous chemicals like Chromium VI, requiring testing and chemical management. The EU Deforestation Regulation (EUDR), effective Dec 2025 (large firms) and June 2026 (SMEs), demands proof that cattle-derived leather is deforestation-free since Dec 2020. This requires robust, end-to-end traceability, including geolocation data of cattle origin. Bangladesh’s current lack of supply chain transparency poses significant compliance risks, threatening EU market access.

Policy and Governance: Lack of Cohesion

Fragmented policies and poor inter-ministerial coordination hinder sector development. The Bangladesh Small and Cottage Industries Corporation (BSCIC) is deemed ineffective in managing the Savar TIE, contributing to CETP issues. Despite incentives, FDI remains challenging due to global disruptions and unresolved compliance issues.

Unlocking the Future: Scopes, Possibilities, and Strategic Pathways

Value Addition: From Raw to Refined

Bangladesh can boost earnings by shifting from semi-finished leather to high-value finished goods and footwear, adding up to 90% more value. The global leather goods market is projected to reach $855.36 billion by 2032. Opportunities exist in mass-market products and niche segments like luxury, artisanal, and specialized footwear. Local brands like Hingare and Aarong already produce high-quality goods.

The Green Revolution: Sustainability and Innovation

Adopting eco-friendly tanning (vegetable, chrome-free) and robust waste management (chrome recovery, biomethanation, Zero Liquid Discharge) is crucial. Pioneering plant-based/vegan leather alternatives, like Banofi Leather (banana fibers) and Rindco Leathers (fruit peels), offers a unique growth avenue, tapping into rising cruelty-free demand and mitigating traditional compliance risks.

Table 5: Key Bangladeshi Companies in Vegan Leather Production

Company Name	Raw Material Source	Product Type	Commercialization Status	Certifications	Key Environmental Benefits
Banofi Leather	Banana fibers, agricultural waste	Plant-based leather for fashion, furniture, automotive, packaging	Commercial (ramping up to 10,000 meters/month by Dec)	REACH, CAL-PROP, TUV, SGS (physical tests)	95% water reduction, 90% carbon reduction, 100% toxic chemical reduction
Rindco Leathers	Fruit peels (jackfruit, mangoes)	Bio-leather for clothing, fashion, accessories (bags, wallets, shoes)	Planning/Prototype stage (won pitch competition)	–	Reduces water pollution from toxic chemicals
Fariha Green Mood Leathers Ltd.	PU/Semi-PU/PVC faux leather	Faux leather for footwear, automotive, apparel, lifestyle	Commercial (10,000 meters/day, 2.4 million meters/year)	–	Reduces imports, ensures top standards

Expanding Market Horizons and Attracting Investment

Bangladesh can expand its market and attract investment by leveraging global supply chain shifts like the “China Plus One” strategy. Strategic partnerships and joint ventures are crucial. Government policies, including the ‘Leather and Leather Products Development Policy’ (2019) and Export Policy 2024-27, offer incentives like reduced corporate income tax, tax exemptions, bonded warehousing, and cash incentives. Three specialized industrial estates in Savar, Rajshahi, and Chattogram aim to provide ESG-compliant infrastructure.

Human Capital: Skilling for a Competitive Edge

A skilled workforce is vital. Targeted training in design, production, and quality control is essential. Improving raw hide preservation through training for butchers and traders can reduce waste and improve quality. More skill development institutes and vocational training centers are needed beyond ILET. Investment in human capital and technology is key for market competitiveness and value realization.

Digital Transformation: Efficiency and Transparency

Digital transformation and automation enhance compliance, traceability, and quality. Adopting automation and digital tools boosts productivity, efficiency, quality control, and safety. Robust digital traceability systems, potentially using blockchain, are crucial for EUDR compliance, requiring geolocation data from raw hide source to finished product. Digitalization of services by industry associations, like LFMEAB’s online registration and supply chain mapping, can improve sector efficiency.

Actionable Recommendations: Charting a Path Forward

To unlock the full potential of Bangladesh’s finished leather and leather products export sector, a coordinated and strategic approach is essential.

Prioritize and fully operationalize the Savar CETP to achieve LWG certification:
- Form a high-level task force to ensure accountability and swift completion of the CETP.
- Appoint a third-party international firm to audit, complete, and ensure the CETP meets LWG requirements, focusing on solid waste and chrome recovery.
- Facilitate LWG certification for at least 15 factories with targeted support and financial incentives.
Develop a comprehensive national policy for raw hide management and quality improvement:
- Formulate a cohesive National Leather Policy with clear targets.
- Establish Price Monitoring and Preservation Units, deploying mobile teams during Eid-ul-Azha to ensure proper salting and fair prices.
- Invest in local-level cold storage and salt-distribution hubs to reduce spoilage.
- Implement widespread training for butchers and traders on proper skinning and preservation.
- Promote and incentivize modern abattoirs and slaughtering facilities.
Incentivize technological upgrades, automation, and research and development (R&D) in sustainable leather:
- Provide financial incentives (low-interest loans, grants) for investment in modern, eco-friendly machinery and automation across all production stages.
- Support R&D in advanced eco-friendly tanning methods and waste-to-energy solutions (biomethanation, chrome recovery).
- Promote and support the commercialization of plant-based and vegan leather alternatives through grants and market linkages.
Strengthen compliance mechanisms for international market access:
- Implement robust, digital traceability systems (e.g., blockchain) across the value chain to meet EUDR requirements, including geolocation data.
- Ensure strict adherence to chemical regulations like REACH through regular testing and transparent supply chain communication.
- Foster collaboration between government, industry, and international partners for compliance.
Foster public-private partnerships to attract investment and drive value addition:
- Streamline entry processes for foreign investors and joint ventures.
- Extend bonded warehouse facilities to export-oriented sectors, similar to RMG.
- Incentivize domestic production of high-value finished leather goods through tax breaks, subsidies, and R&D grants.
Invest in branding “Made in Bangladesh” leather products globally:
- Support SMEs with design and branding assistance to cultivate global Bangladeshi brands.
- Promote Bangladesh’s leather quality through international marketing and trade fairs.
Empower the workforce through continuous skill development and training:
- Establish and expand dedicated skill development institutes and vocational training centers.
- Provide ongoing training in modern design, international marketing, quality management, and compliance.
- Ensure decent working conditions, fair wages, and human rights protection.

The challenges are interconnected, forming a complex web where a single solution is insufficient. The failure to achieve LWG certification due to CETP issues creates a vicious cycle: restricted market access leads to lower prices, which in turn reduces revenue for tanneries, limiting their capacity to invest in compliance and upgrades. This “compliance trap” means that environmental responsibility is not just a moral obligation but a direct economic imperative.

Furthermore, Bangladesh’s traditional advantage of low-cost labor is no longer a sufficient differentiator in the global market. While it provides a foundational benefit, future growth hinges on moving up the value chain through superior quality, innovation, and unwavering commitment to sustainability. This requires a strategic transformation from a low-cost volume producer to a high-value, quality-driven, and environmentally conscious supplier. This shift necessitates significant investment in design capabilities, advanced technology, brand building, and robust environmental stewardship, even if it entails higher initial costs.

Finally, digital transformation and automation are not optional enhancements; they are fundamental enablers for achieving compliance, improving traceability, enhancing quality, and attracting modern investment. The impending EUDR, for instance, makes end-to-end traceability a non-negotiable requirement, forcing a digital overhaul of the entire supply chain, from the farm to the factory. This “digital backbone” is crucial for Bangladesh to break free from its current stagnation and compete effectively in the global market. A coordinated, holistic strategy, embracing environmental stewardship, technological advancement, human capital development, and market diversification, will pave the way for Bangladesh’s leather industry to realize its ambitious export targets and secure a sustainable, prosperous future.

C. Basu

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