Bangladesh’s leather industry is forfeiting billions of dollars in potential export earnings as persistent environmental compliance failures, weak infrastructure and a dependence on low-value markets continue to undermine one of the country’s most promising manufacturing sectors.
The crisis resurfaced during this year’s Eid-ul-Adha season, when thousands of rawhides were sold at heavily discounted prices, while many others were discarded or buried after traders failed to find buyers. The annual disruption has become a symbol of deeper structural problems that industry leaders say have remained unresolved for nearly a decade.
Despite producing around 4% of the world’s rawhide and skin resources and generating an estimated 350 million to 400 million square feet of hides and skins annually, Bangladesh’s leather sector has largely failed to translate its resource advantage into export growth.
According to the Export Promotion Bureau (EPB), exports of leather, leather goods and footwear stood at $1.14 billion in fiscal year 2024-25, virtually unchanged from $1.13 billion recorded a decade earlier in FY2014-15. During the same period, Bangladesh’s ready-made garment exports surged from approximately $25 billion to over $40 billion.
Industry experts say the stagnation reflects a massive missed opportunity.
Commerce and Industries Minister Khandaker Abdul Muktadir recently said Bangladesh could potentially generate between $10 billion and $12 billion annually from leather and leather goods exports if longstanding bottlenecks were addressed. According to the minister, the country is currently utilizing only a fraction of its leather potential.
The decline is particularly evident in leather exports. Overseas leather shipments climbed from $226 million in FY2010 to nearly $400 million in FY2015 before entering a prolonged downturn. By FY2025, leather exports had dropped to just $128 million, while exports during the first nine months of the current fiscal year reached only $97 million.
Industry leaders largely attribute the sector’s struggles to the incomplete development of the Savar Tannery Industrial Estate, where tanneries were relocated from Hazaribagh in 2017.
The relocation was intended to modernize the industry and address environmental concerns. However, the estate’s Central Effluent Treatment Plant (CETP), a critical requirement for international environmental compliance, has yet to function effectively enough to satisfy major global buyers.
As a result, many Bangladeshi tanneries remain unable to secure certification from the Leather Working Group (LWG), widely considered essential for supplying leading international fashion brands and retailers.
“The compliance gap is the single biggest obstacle facing the sector,” said Md Tipu Sultan, chairman of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association.
“One or two compliant factories are not enough. If at least 50 of the country’s approximately 150 tanneries can meet internationally recognized standards, more global buyers will source from Bangladesh.”
The lack of compliance has significantly altered Bangladesh’s customer base. Industry stakeholders say European and American buyers have largely reduced sourcing from the country, leaving manufacturers increasingly dependent on Chinese buyers.
“Major European buyers are not coming to Bangladesh because we still cannot demonstrate full environmental compliance,” said Md Salauddin Ahmed, managing director of New Kajol Tannery Ltd.
“We are largely dependent on Chinese buyers, who currently dictate prices.”
That dependence is reflected in pricing. According to industry estimates, Chinese buyers often purchase Bangladeshi processed leather for as little as $0.50 to $0.55 per square foot, limiting profitability throughout the supply chain.
The impact ultimately reaches seasonal traders, madrassas, orphanages and rural households that sell sacrificial animal hides during Eid-ul-Adha.
Although the government fixed salted cowhide prices in Dhaka at Tk62 to Tk67 per square foot this year, market transactions fell well below those levels. Most hides changed hands for between Tk300 and Tk700 depending on size and quality, far below expected values.
Industry leaders say rising processing costs have further complicated the situation. Prices of imported chemicals used in tanning have increased by 20% to 30% in recent years, while international leather prices have remained weak.
Meanwhile, valuable resources continue to go underutilized.
Also Read: Eid Rawhide Glut Exposes Bangladesh Leather Woes
Md Mizanur Rahman, professor and director of the Institute of Leather Engineering and Technology at the University of Dhaka, estimates that nearly 30% of Bangladesh’s leather resources are lost due to poor preservation, inadequate processing capacity and the failure to utilize tannery by-products.
“We are sitting on a huge resource, but we are not using it properly,” Rahman said.
He noted that leather offers one of the highest value-addition opportunities in Bangladesh’s manufacturing sector, with as much as 90% value addition possible because most raw materials are sourced domestically. Tannery waste can also be converted into gelatin, collagen, fertilizer and animal feed, creating additional revenue streams.
Experts argue that market reforms are equally important. Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), has called for year-round exports of salted and wet-blue leather, arguing that broader market access would increase competition, attract investment and improve hide collection systems.
Vietnam’s success demonstrates what is possible, industry leaders say. While Bangladesh and Vietnam had comparable leather export industries in the early 1990s, Vietnam has since become the world’s second-largest footwear exporter, generating approximately $29 billion annually.
“The difference is infrastructure and compliance,” said Md Nasir Khan, vice-president of the Footwear, Leather Goods and Accessories Exporters Association. “Bangladesh has the raw materials, but without compliance and market access, we cannot unlock the sector’s true value.”
For now, Bangladesh’s leather industry remains trapped between untapped potential and unresolved structural challenges. Unless the country achieves full environmental compliance, diversifies its export markets and modernizes its supply chain, industry leaders warn that billions of dollars in potential export earnings will continue to slip away
