Bangladesh's Leather Exports Hit $1.23 Billion — With Far More Available

Leather earned Bangladesh $1.23 billion in FY2025-26, its third-best year ever. Industry leaders say exports could double once one piece of infrastructure in Savar works properly.

Leather is Bangladesh's most credible manufacturing diversification after garments — once compliance is solved. Photo: Fahad Faisal, via Wikimedia Commons (CC BY-SA 4.0)

By the UISC BD Editorial Desk · United Information Service Center · Published 9 September 2026 · 9-minute read

Bangladesh's leather sector earned $1.23 billion in the 2025-26 financial year — the third-highest figure in the country's history, and a 7.07 percent increase on the year before.

Industry leaders say that number could double. What stands between the sector and that outcome is not demand, not skill, and not raw material. It is a single piece of environmental infrastructure.

Why Leather Should Be Bigger Than It Is

Bangladesh has structural advantages in leather that few countries can match. It has a large domestic livestock population producing hides as a by-product of meat consumption — including the substantial seasonal supply generated around Eid-ul-Azha. It has decades of tanning and leather-goods manufacturing experience. And it has the same skilled, cost-competitive labour force that made garments a global industry.

Leather is also a natural diversification target. As LDC graduation in November 2026 erodes preferential access for garments, sectors that can grow on their own competitive merits matter more.

The Bottleneck: Four Letters

LWG — the Leather Working Group — is the international environmental certification standard that global footwear and fashion brands require from their suppliers. Without it, a tannery is effectively locked out of the buyers who pay the most.

This is the constraint on Bangladeshi leather. Of the tanneries in the Savar Tannery Industrial Estate, around 140 of 162 allocated plots are operational — but most cannot export directly to European and American markets because they lack certification. Within the Savar cluster, only Simona Tanning holds LWG certification.

A recent audit of twenty Savar tanneries found only three scoring above 50 percent against the LWG protocol.

The CETP Problem

The reason certification remains out of reach is specific and identifiable: the Central Effluent Treatment Plant (CETP) at Savar does not perform to standard.

Tanning is chemically intensive. Treating the resulting effluent is not optional under any credible environmental standard, and LWG assessment covers effluent management directly. A shared treatment plant that fails its own compliance requirements means every tannery relying on it fails with it — regardless of how well an individual factory is run.

The Savar estate itself was built to solve an environmental problem, relocating tanneries out of Dhaka's Hazaribagh neighbourhood, where untreated discharge had caused severe pollution. The relocation happened. The treatment capacity did not follow at the required standard.

That is why industry figures describe the situation in terms of a trap: the infrastructure intended to unlock export markets has become the thing blocking them.

What the Reform Plan Proposes

The government has set out a coordinated plan to revive the sector, with three notable elements:

Making LWG certification mandatory — turning it from an aspiration into a condition of operation
A "graceful exit" mechanism for long-term investors unable or unwilling to meet the standard, allowing consolidation without disorderly failure
Shifting focus toward finished leather exports rather than raw or semi-processed hides

The third point carries the most economic weight. Exporting raw hides captures a fraction of the value that exporting finished leather or leather goods does. Moving up that chain is the same "high-road" logic set out in Bangladesh's Smooth Transition Strategy for the post-LDC era.

The Scale of What Is Being Left on the Table

The president of LFMEAB — the leather goods and footwear manufacturers' association — has stated plainly that once a functioning, audited CETP is in place, leather exports can double.

Applied to the $1.23 billion base, that implies an industry approaching $2.5 billion — comparable in scale to Bangladesh's pharmaceutical sector ambitions, achieved not through new capability but through fixing infrastructure that already exists on a site already built.

Analysis published in trade press has framed the current situation as costing the country billions in foregone exports because of compliance gaps and Savar infrastructure problems.

The Honest Reading

This is a genuinely encouraging story with an uncomfortable middle. The sector just posted its third-best year on record and grew 7 percent. Demand exists. Capability exists. Raw material exists.

The obstacle is a treatment plant that does not work well enough, and the reason that matters is environmental compliance — which is not a bureaucratic technicality but the actual thing international buyers are checking, and, separately, the thing that determines whether the rivers around Savar are poisoned.

Solving it serves both objectives at once. That is a rarer alignment than it sounds, and it is why this particular bottleneck is worth as much attention as it receives.

Frequently Asked Questions

How much does Bangladesh earn from leather exports?

$1.23 billion in the 2025-26 financial year, the third-highest total in the country's history and up 7.07 percent year-on-year.

What is LWG certification?

The Leather Working Group standard — an international environmental certification that global footwear and fashion brands require from tanneries in their supply chains. Without it, access to premium European and US buyers is largely closed.

Why can't Bangladeshi tanneries get LWG certified?

Chiefly because the Central Effluent Treatment Plant at the Savar Tannery Industrial Estate does not meet compliance standards, and effluent management is directly assessed under the LWG protocol.

How many tanneries operate at Savar?

Around 140 of 162 allocated plots are operational. Only one tannery in the cluster, Simona Tanning, currently holds LWG certification.

How much could Bangladesh's leather exports grow?

Industry leadership states exports could double once a functioning, audited CETP is in place — implying a sector approaching $2.5 billion.

Sources

"Leather exports hinge on LWG certification, environmental compliance," The Daily Star — thedailystar.net
"Poor compliance in Savar tanneries forcing leather industry out of global markets," The Business Standard — tbsnews.net
"Behind Bangladesh leather industry's 'LWG certification gap'," The Business Standard — tbsnews.net
"Govt plans graceful exit, LWG certification to revive leather sector," TOB News — tob.news
"Bangladesh's leather sector eyes fresh 'hope' even as Savar's old troubles persist," bdnews24 — bdnews24.com

cetp savar (1)