The Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) has sought a reduction in limit of local value addition to leather products to 20 per cent. As per a Dhaka Tribune report, the rate cut will help enhance the sector's competitiveness on the global market. On May 9, Bangladesh Bank (BB) lowered local value-addition rate for the country's textile-sector exporters to 20 per cent from 30 per cent for the current fiscal year, in view of the current crunch time.

Currently, leather goods exporters enjoy 15 per cent cash incentives against their export shipments. During the past 10 months of the current fiscal year (FY), Bangladesh’s exports of leather and leather goods and footwear grew by 33 per cent. The export volume of leather and leather goods, and products like footwear and bags grew to $1.29 billion in the July-April period of FY22.

Bangladesh imports most of the accessories of the footwear sector as it does not have sufficient factories to manufacture them

Famous brands and buyers operating in the country nominate foreign accessories suppliers to maintain the product quality and compliance. Manufacturers import the required raw materials in a short span of time due to 'lead time' constraint set by the brands and customers concerned.

As a result, exporters cannot maintain the current 30 per cent domestic value-addition threshold is not possible to maintain, as per the LFMEAB. This leads to most exporters, especially non-leather goods exporters, being deprived of cash incentives and losing competitiveness capacity, adds the association.

In the last fiscal year, Bangladesh exported leather and leather goods worth $941.67 million. It plans to export $10 billion leather and leather goods by 2030, says Tapan Kanti Ghosh, Secretary, Ministry of Commerce.