Compliance Challenges and Pathways for Bangladesh’s Leather Industry

Bangladesh’s leather and footwear industry ranks as the country’s 2^nd-largest export sector after ready-made garments. The manufacture of leather and related products provides employment to approximately 2.04 lakh   individuals [1] and accounts for about 2.37 percent [2] of the country’s total export earnings as per ITC calculations based on UN COMTRADE and ITC statistics 2024, while contributing nearly 1.96 percent to the country’s GDP. [3] The Industry Policy 2022 made this sector a priority, and Bangladesh is becoming a global sourcing hub because it has a cost-competitive workforce, access to raw materials, and policy incentives. [4]

The leather goods market was expected to rise USD 855.36 billion by 2032, with a compound annual growth rate (CAGR) of 7.05% . [5]

Based on the data from Export Promotion Bureau (EPB),  Bangladesh's total leather exports for FY2024–25 were USD 1.14 billion, which is a 10.19% rise from the previous year. However, this performance remains significantly below the targets outlined in the Leather and Leather Goods Development Policy 2019, which aimed to raise export earnings of the sector to USD 5 billion by 2024, with an anticipated contribution of 1 percent to the national GDP. This clear gap between  the projected potential and its realized performance. [6]

Furthermore, Bangladesh’s leather footwear export experienced robust growth, expanding by 23.54%. Over the past decades, the consistent upward trend has positioned the country among the world’s top ten footwear producers, as cited in the World Footwear 2024 Yearbook. [7]

Bangladesh’s leather and leather goods exports are distributed across key markets, including the USA, China, India, France, Germany, Italy, Japan, Korea, Hongkong, the UK, etc. Despite this wide market reach, global buyers remain cautious, as Bangladesh continues to lag in meeting critical compliance standards, particularly concerning waste management and effluent treatment .

Environmental Compliance

Sustainability in the leather industry means environmental stewardship. The tanning process involves hazardous chemicals like chromium which if not managed properly may pollute the water.220 tanneries were relocated to Savar Tannery Estate in 2017 when Central Effluent Treatment Plant (CETP) was not fully operational and solid waste management system was not in place. Industry insiders pointed out that technical and managerial weakness, excessive pollution load than capacity, financial constraint, no pre-treatment at tannery level, and inefficiency in solid waste management could cause significant challenge in environmental compliance. [8]

Compliance with international quality standards is also critical for market competitiveness. Industry insider addressed, access to key export markets, particularly in the EU and US, requires certifications such as ISO 14001 and the Leather Working Group (LWG) standard.  However, only 8 Bangladeshi companies—hold LWG certification. Waste management which is related to CETP alone contributes 300 of the 1,710 points in the LWG audit. The absence of LWG certification restricts access to high-value markets, leaving Bangladesh to compete in low-margin segments while rivals like Vietnam and India dominate premium categories. [9]

Social Compliance

In addition to environmental compliance, social compliance constitutes a critical concern for the leather industry. For instance, workers often lack awareness of their entitled leave provisions, while many employers deny workers’ sick leave. Similarly, a segment of female workers remains unaware of their rights to maternity leave, and employers frequently refrain from granting such benefits in accordance with the Bangladesh Labor Act (BLA), 2006. (Mia, Sarker, & Islam, 2022). [10]

A study (2024) reported that 84.2% of tannery workers in Bangladesh suffer from health issues attributable to their occupational environment. [11] More than half of workers make less than the industry minimum wage of Tk 13,500, and a sizable portion do not have official employment contracts, per a survey (2022) by the Bangladesh Labor Foundation (BLF) and RAPID. Employees who work in hazardous environments are susceptible to headaches, respiratory problems, stomach disorders, and skin diseases. [12] The significance of implementing and upholding labor standards is highlighted by the fact that some buyers demand certification such as Business Social Compliance Initiative (BSCI), which encourages moral behavior and better working conditions across supply chains.

Quality Standards

BSTI introduces certification for three leather goods products including Direct Molded Sole (DMS) Boots for General Purpose, Leather Footwear (Physical), and Sole Leather (Vegetable Tanned).This national certification body mandates that manufacturers adhere to the BDS requirements for exporting these goods.International markets like the USA, EU, and others  have more stringent or different compliance requirements, which presents an extra layer of difficulty for Bangladeshi exporters. For exporters looking to maintain their competitiveness in the global leather market, this compliance burden poses a serious quality standard challenge.

For Bangladeshi leather exporters, non-tariff compliance requirements pose a significant obstacle that imposes operational and financial strains. The Global Recycled Standard (GRS), one of these certifications, is crucial because it confirms recycled content and guarantees ethical material handling across the supply chain. Exporters need to get certifications like an Environmental Clearance Certificate, a Certificate of Origin, and LFMEAB membership certification in order to enter the US market. Compliance requirements differ by buyer, with some requiring audits conducted from other organizations or from Société Générale de Surveillance (SGS) Bangladesh Limited or Nirapon.

Institutional and Policy Challenges

Bangladesh’s leather sector is facing institutional and policy challenges, including low wages (approximately 15000 taka per month) and working environment which discourage skilled graduates from joining. Experts pointed out that industry, academia, and government cooperation centered on innovation and practical skills is lacking. Furthermore, regulatory  barriers, inefficiencies in customs lead to delays and increased shipment costs, highlighting the urgent need for reforms to improve competitiveness.

Additionally, the factories and tanneries lack a consistent monitoring system to stop labor rights violations. These policy inconsistencies, which go against these policies or acts (Leather and Leather Development Policy 2019, Industrial Policy 2022, Bangladesh Labour Act, 2006, etc.), affect the sector's long-term trajectory and discourage investment. [13]

Pathways for Improvement

A multi-dimensional strategy may be required to overcome these challenges:

1.      Implement cleaner production technologies in tanneries to minimize hazardous discharges.

2.      Upgrade CETP infrastructure and introduce pre-treatment systems to improve waste management and regulatory compliance.

3.      Ensure labor compliance and occupational safety through monitoring, wage enforcement, contracts, protective equipment, and training

4.      Conduct worker awareness and capacity-building programs on rights, leave, and safe chemical handling

5.      Align tanneries with LWG certification and international standards for traceability, chemical management, and sustainability.

The leather industry of Bangladesh currently stands at a critical juncture, facing pivotal challenges and opportunities that will shape its future trajectory. While the economic value and global competitiveness is huge, compliance issues – environmental, social and quality – are holding back growth. The leather industry may undergo positive changes as a result of market diversification, policy stability, workforce development, and infrastructure investment. With strategic interventions and coordinated efforts from government agencies, private sector and international partners, Bangladesh may turn its leather sector into a sustainable, high value and globally competitive industry.