As Bangladesh approaches its graduation from the Least Developed Country (LDC) status in 2026, the leather industry—currently the nation’s second-largest export earner—faces significant challenges. The impending loss of duty-free, quota-free (DFQF) market access and the imposition of higher tariffs in key markets necessitate urgent reforms to maintain competitiveness.
Current Export Landscape
Between July 2024 and March 2025, Bangladesh’s leather exports totaled $852.01 million, marking a 9.89% increase compared to the same period the previous year. Leather footwear emerged as the primary driver, accounting for nearly 58% of all leather-related exports with sales reaching $496.17 million—a 25.24% year-on-year growth . However, exports of leather goods declined by 6.11%, totaling $256.44 million.(Leather News)
Implications of LDC Graduation
Post-LDC graduation, Bangladesh will face the cessation of DFQF market access in many countries. In the European Union (EU), while the Most Favoured Nation (MFN) tariff on leather (HS 41) and leather products (HS 42) remains low at about 3% and 5% respectively, leather footwear (HS 64) will attract an MFN tariff of around 10% . Securing GSP+ status could mitigate some of these impacts, but it requires compliance with stringent labor and environmental standards.(United Nations+3ERD Portal+3TBS News+3TBS News)
Certification and Compliance Challenges
A significant hurdle for the leather sector is the lack of Leather Working Group (LWG) certification. Currently, only a few Bangladeshi tanneries possess this certification, limiting access to premium international markets . This shortfall not only restricts market access but also results in lower pricing for Bangladeshi leather products.(TBS News)
Environmental and Infrastructure Concerns
The Central Effluent Treatment Plant (CETP) at the Savar Tannery Estate remains underutilized, raising environmental compliance issues. Additionally, solid waste management within the leather industry is inadequate, leading to environmental degradation and potential health hazards .
Strategic Recommendations
To navigate the post-LDC landscape, the following measures are recommended:
-
Enhance Certification Efforts: Facilitate and incentivize LWG certification for tanneries to meet international standards.
-
Invest in Infrastructure: Fully operationalize the CETP and improve waste management systems to ensure environmental compliance.
-
Skill Development: Implement training programs to upskill workers, focusing on sustainable practices and quality control.
-
Market Diversification: Explore new markets and diversify product offerings to reduce dependency on traditional markets.
-
Policy Support: Engage in diplomatic efforts to secure favorable trade agreements and extend DFQF access where possible.
By addressing these challenges proactively, Bangladesh’s leather sector can not only mitigate the adverse effects of LDC graduation but also position itself for sustainable growth in the global market.
Related posts:
