About the project

Partner: Light Engineering Product Business Promotion Council, Ministry of Commerce and Bangladesh Engineering Industry Owners’ Association (BEIOA)
Project duration: January 2023 - April 2023
With looming uncertainty over the future of the readymade garment (RMG) exports because of LDC graduation, the importance of export diversification has never been more emphasized. Keeping aside the concerns about readymade garment export prospects, the light engineering industry (LEI) could be a sector promoting exports and employment opportunities for a growing labor force. A recent study by RAPID shows that LEI products do have a strong domestic market demand--about Tk. 25,000 crore--and a tremendous export potential. The sector recorded more than 50 per cent export growth over the past two years. The same study finds that the LEI sector is significantly diversified in terms of product varieties and export destinations. A substantial proportion of LEI export goes to developing countries, including large neighboring economies such as India and China. Given the size of these two economies, the potential market prospect for Bangladesh’s exports from the sector should be massive.

However, despite the potential, the contribution of LEI in total export remains low: just 1.5 per cent of total merchandise exports. Thus, increasing light engineering product exports constitutes a policy priority to help diversify the export basket and stimulate the export income of Bangladesh in the post-graduation period. It has been found in the previous RAPID study that less than 2 per cent of the LE firms in Bangladesh are currently exporting to different destination markets, while another 16 per cent reported having the potential and willing to explore exporting opportunities. However, there is very limited information about their preparedness and strengths for being able to competitive exporters. Also, lack of understanding of the international demand of LE products that are currently being produced by these firms is also an issue. The areas of policy support for developing export readiness comprise another critical area of knowledge gap.

Against the above backdrop, this study will deep dive into the factors affecting export readiness of the firms that have potential capacities to explore international markets. In doing so, the study will examine the current state of the firms, international demand for the products produced by these firms, constraints faced by LEI in improving their competitiveness and exploring export markets, and policy support needed to realize the export potential of the sector. .

Project activities

Fieldwork: Survey on Light Engineering

RAPID research team has conducted seven in depth interviews with the light engineering industry owners. The research team has also visited LE factories located in Narinda, Wari, Postogola industrial area, Rayerbagh, Zatrabari, Munshigonj etc. During the factory visit, the research team members have identified major products of different industries which have export potentials, used raw materials and machineries of the light engineering firms. Besides, the research team has also identified the physical and financial infrastructural conditions of the firms with export potentials.