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Bangladesh stands at a pivotal juncture in the current global economic landscape. For decades, the Ready-Made Garments (RMG) industry has dominated the country’s export narrative—contributing over 80% of export earnings and this hyperreliance has increasingly exposed Bangladesh to external market fluctuations.
Recognizing its potential to become Bangladesh’s next major export hub, policymakers and industry experts have put the light engineering (LE) sector in the spotlight. Considering the evolving global markets and the country’s accelerating industrial development, this sector is uniquely poised to diversify Bangladesh’s export basket, generate employment, and bolster sustainable economic growth.
The Bangladeshi LE sector comprises over 40,000 enterprises and employs approximately 1 million skilled, semi-skilled and technically educated individuals. Industry insiders contend that the sector contributes 2–3% to GDP as of 2023, underscoring its growing importance in the national economy.
According to the Export Promotion Bureau (EPB), engineering equipment remains the largest export segment (USD 241.56 million in 2021–22), followed by bicycles (USD 167.95 million) and iron steel (USD 154.68 million). Additional products, such as copper wire, stainless steel-ware, and electrical goods, also fall under the list of exported items.
The LE sector’s product portfolio is both extensive and diverse. It spans:
Recent EPB data indicate that the sector has grown at a Compound Annual Growth Rate (CAGR) of 22.27% from 2017 to 2022. However, alternate estimates from industry associations suggest the figure could be as high as 28.3%, reflecting rapid expansion across multiple sub-segments.
Favourable macroeconomic indicators, trade factors and demographic trends have contributed to the expansion of the LE sector of Bangladesh. Some of the factors contributing to this growth are:
Tapping into the inherent potential of the Bangladeshi LE sector inevitably requires a supportive policy framework. The Government of Bangladesh realized this necessity and has thus crafted the following policies:
To further bolster the LE sector of Bangladesh, some more reforms may take place. Raw material tariffs should be harmonized with those of finished goods to encourage local manufacturing and import substitution. Export markets should be expanded beyond the EU and North America by utilizing trade agreements like the UK’s Developing Countries Trading Scheme and venturing into emerging markets in Africa and the Middle East.
This initiative could generate an additional USD 500 million in revenue over five years. Formalizing micro-enterprises and integrating them into larger supply chains would improve both efficiency and competitiveness. Furthermore, expanding sustainable practices, building on Bangladesh’s 200+ LEED-certified factories, could draw in environmentally conscious investors and position the sector for sustainable long-term growth.
Wasif Mahmud, a Business Analyst, at LightCastle Partners has prepared the write-up. For further clarification, please contact: [email protected]
[1] Export Promotion Bureau (EPB), Light Engineering Sector Export Data 2017–2022
[2] World Bank, World Development Indicators 2023
[3] Bangladesh Bureau of Statistics (BBS), Manufacturing Sector Growth Trends 2013–2024
[4] International Trade Centre (ITC), Emerging Market Opportunities for Bangladeshi Exporters, 2023
[5] Bangladesh Economic Zones Authority (BEZA), Green Manufacturing Initiatives, 2024
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