Enhance light engineering capacity to diversify exports: experts

Bangladesh needs to strengthen local capacity, enhance value addition, and develop backward linkages in agricultural machinery, automobiles, and light engineering to ensure sustainable growth and diversify its export base, according to experts and industry leaders.

They also urged facilitating more local and foreign investments, citing that appropriate policy support was essential for reducing reliance on imports.

"Although Bangladesh has immense potential in the light engineering, agro-machinery, and automobile sectors, its trade basket remains heavily concentrated on readymade garments (RMG)," said M Masrur Reaz, chairman of the Policy Exchange of Bangladesh.

Reaz made his remarks at the inaugural ceremony of the "Road to Made in Bangladesh and Agro Machinery Fair 2025" in the capital's Tejgaon.

The Bangladesh Chamber of Industries (BCI), with support from the Bangladesh Automobiles Assemblers and Manufacturers Association and the Agricultural Machinery Manufacturers Association Bangladesh, organised the two-day fair at the BCI office.

Bangladesh's light engineering sector has the potential to generate $12.56 billion in export earnings by 2030, according to the Policy Exchange of Bangladesh.

The country is home to about 80,000 micro, small, and medium light engineering units, with a domestic market valued at around $8 billion and an annual growth rate of nearly 28 percent, said Reaz.

The annual export earnings have hovered between $300 and $800 million in the last eight years. However, Bangladesh exported $487 million worth of goods from the light engineering sector in FY24, he said in a presentation.

There are some growth drivers for light engineering in Bangladesh, including low-cost labour and adoption of technology. Around 10 lakh low-cost labourers are involved, and high domestic and external demand will work as a growth driver, he said.

Reaz said local manufacturers currently meet only 20 percent of the demand for agricultural machinery in the country, with the rest being imported.

He warned that the agricultural workforce, once the largest, fell behind the service sector in 2020, posing risks to food security.

Post-harvest losses account for 40 percent to 45 percent of crops due to poor handling and storage, he noted, adding that agricultural machinery can improve efficiency by reducing seed, fertiliser, and water use.

Speaking as the chief guest, Industries Adviser Adilur Rahman Khan said the national industrial policy has prioritised three sectors—automobiles, agricultural machinery, and light engineering.

"These sectors are playing a very important role in developing productive industries, diversifying exports, and creating employment," he said.

"Agro-mechanisation is strengthening national food security, while the automobile industry is modernising transportation and energising the economy," he added.

The government has already taken effective measures to support these sectors through policy incentives, tax benefits, and infrastructure development, he added.

BCI President Anwar-Ul Alam Chowdhury (Parvez) said Bangladesh must tap into the large automobile market and diversify exports beyond readymade garments ahead of the nation's least developed country (LDC) status graduation.

He noted that the economy relies heavily on remittances, RMG, and agriculture, where growth is limited, and for which it was crucial to build up alternative sectors.

"Although money laundering has been curbed to some extent, private sector growth remains sluggish while unemployment is rising rapidly," he observed.

"RMG alone cannot sustain our economic ambitions; the future lies in manufacturing, particularly in light engineering," he added, stressing the need for strong policy support and government incentives.

He also underscored the importance of industry-academia collaboration in the era of artificial intelligence and automation and called for expanding capacity in automobile and agricultural machinery production to ensure economic sustainability.

Hafizur Rahman Khan, president of the Bangladesh Automobiles Assemblers and Manufacturers Association, emphasised the need to identify sectoral challenges and address them through business-to-business meetings.

M Abu Eusuf, executive director of the Research and Policy Integration for Development, said Bangladesh lagged behind in export and economic diversification, even though RMG was thriving due to strong compliance.

He added that developing backward linkages could cut import dependency. He emphasised the need for foreign direct investment, policy support, and better ease of doing business to leverage the domestic market.

Alimul Ahsan Chowdhury, president of the Association of Agricultural Machinery Manufacturers, said food security was dependent on agricultural machinery. He called for easier access to the Bangladesh Bank's small and medium enterprise refinancing scheme.