400

366.63

350

309.55

300

220

200
150
100
50

Following recommendations would strengthen our domestic LES industry

Establish light engineering industrial zone in key areas where the cluster
already exists.

Establish metal and quality testing facilities at each cluster.

Establish technical colleges for skilled manpower.
Establish good relationship and agreement on export facility with

2013-14

2010-11

Year

2003-04

45.824

Bangladesh
The most preferred

investment destination
in South Asia

Tax holidays and accelerated depreciation is also

allowed.

129.91

Key recommendations for the development of LES

Europe and Middle East.

Bangladesh offers the most liberal FDI regime in South

Asia. There is no limit on equity participation and
repatriation of profits and income.

250

1974-75

US$ in Millions

After satisfying local need the sector is

also exporting several products to
international market. Increasing trend in
the graph shows promising future of the
sector in international spectrum. LE
products from Bangladesh mainly go to EU
and USA. Exporters receive 10 percent
cash incentive from the government on
export value. Moreover, in the European
market, Bangladeshi LE products enjoy
zero duty under GSP facility.

Why Bangladesh

Export of Light Engineering Products in Million US Dollar

1971-72

Export Scenario of Light

Engineering Sector

Bangladesh ...
Your
Dream Investment
Destination

Businesses exporting at least 80% of goods or services

qualify for duty free import of machineries and spares
and bonded warehouse facility.
Cash incentives for selected products.
Equal treatment for local and foreign investors.
Foreign investment is protected from expropriation and
nationalisation by the Foreign Private Investment
(Promotion & Protection) Act 1980.
Complete duty and quota free access to EU, Japan,
Canada, Australia and most other developed countries.
Investors can repatriate dividend and capital at exit.
Young and energetic work force, nearly 60% of the total
population is economically active and almost a million
graduates enter the workforce annually.
Bangladesh is a signatory to ICSID, UNCITRAL, OPIC,
MIGA, WAIPA, WIPO an WTO.

Light

Engineering
Sector of Bangladesh

US,

Ensure access to finance and low interest fund for capacity building and
expansion.

Jiban Bima Tower (19th Floor)

10, Dilkusha Commercial Area
Dhaka-1100, Bangladesh.

Ensure low cost import of raw materials through duty waivers.

Availability of data about the industry must be ensured to make strategic
decision, research and development.

Board of Investment
Prime Ministers Office

Phone : +880-2-957 7271

Fax
: +880-2-956 2312
E-mail : service@boi.gov.bd
Web : www.boi.gov.bd

Board of Investment
Prime Minister's Office

www.boi.gov.bd

What is Light Engineering Sector?

There is no specific definition of the sector; however, the generally accepted form of light
engineering is an engineering enterprise that reshapes or resizes metal, steel or such raw materials
into metal products. The product may be industrial machineries, spare parts, agro machineries or
electronic items.

Dynamics of Light Engineering Industry:

There are generally three types of light engineering industries based on production process and
value addition.

1. Foundries:

This is where Pig iron, Ferroalloys or scrap irons become cast metal. Here, the raw materials are
heated until it liquefies, and is then poured into a mould to cool down and solidify. The casted
iron comes out as shape of the mould which needs further processing to get finished product.
Generally Cupola and Crucible furnaces are used for the melting process in Bangladesh. There
are two types of foundry; one type uses iron and is called ferrous type foundries and the other
type uses different non ferrous metals like aluminum, brass, lead, etc.
Products such as metal casing of pumps, liners for engines, different components of engines,
pumps, power tillers parts, tube well, rice hullers, oil expellers, paddy threshers, small spare
parts for different engines including automobiles and different types of stop cock.

2. Finishing Unit:

Finishing units generally comprises of lathe, drill and cutting machines to finish the casted irons
from foundry unit. Finishing of separate units of a product as well as assembling of separate parts
is done here. These finishing units generally deal with generic products which can be sold to
wholesalers and retailers quickly. They keep a close contact with foundry units for supplies.

3. Repairing Workshops:

Industrial machineries components often require repairing works which are done by the repairing
shops. The work involves manufacturing spare parts, repairing old spares and assembling. These
repairing workshops orders specific items from foundry units for machineries repairing.
Dhaka

North Bengal

Khulna

Spare parts and complete machineries of

Construction equipment
Sapre parts of automobile
Industrial equipment and spare parts
Electrical accessories (fan, switch,
circuit breaker etc)
RMG accessories

Spare parts and complete machineries of

Processing mills (rice, our, jute etc.)
Tractor, Power tiller, Engine
Tube well, Water pump
Spare parts of automobile

Spare parts and complete machineries of

Processing mills (rice, our, jute etc.)
Tube well, Water pump
Spare parts of brick manufacturing
machine

Chittagong

Sylhet

Spare parts and complete machineries of

Mostly related to ship breaking industry
Construction material
Spare parts of automobile

Spare parts and complete machineries of

Processing mills (rice, our, jute etc.)

Light Engineering

Light Engineering Sector of Bangladesh

A glimpse on Light Engineering Sector of Bangladesh:

Light Engineering Sector (LES) has emerged as the foundation of development providing platform for industrial

growth, enhancement of trade and economic prosperity. The light engineering industries have potency to play a
significant role in technological and economical development along with a vast scope of employment generation.
Light Engineering Sector is classied as a sub-sector of Small & Medium Enterprises (SMEs). An estimate shows that
there are about 40,000 light engineering industries in the country. According to the estimate around 0.6 mn
semi-skilled, skilled and technically educated people and innovative entrepreneurs are actively engaged with the
sector.
In Bangladesh, over 90% of light engineering industries are serving the local needs of the people. There are strong
backward and forward linkages between the light engineering industries and other sectors (such as agriculture,
automobile, and transportation) of Bangladesh.
There are about 1200 light engineering industries presently enlisted in Bangladesh Small & Cottage Industries
Corporation (BSCIC) who are supplying various products (such as spare parts, equipment, capital machinery) under sub
contacting scheme.
The light engineering industries of Bangladesh is currently producing more than 10,000 types of quality machinery,
spares and accessories.
The consumer of light engineering products and services are both the public and private sector. Major public sector
consumers are - Sugar and Food Industries Corporation, Bangladesh chemical Industries Corporation, Bangladesh
Railway, BRTA, BRTC, BIWTA, BIWTC, Port Authority, WASA, T & T, PDB, Public Health Engineering, Civil Aviation,
Bangladesh Biman. The private sector is also a major consumer of the light engineering products.
A number of potential export quality light engineering products are going to foreign market on direct and
subcontracting means. These are spare parts of Paper & Cement mills, Bicycle, Fancy light fitting, Construction
equipment, Battery, Voltage stabilizer, Iron chain, Cast iron articles, Carbon rod, Automobile spares, Electronics items,
and Stainless steel wares.
The infrastructure facilities (such as electricity, gas, transportation, and telecommunication) and labor cost are
comparatively lower than other countries and hence the sector shows high potential for growth and development.

Industry Profit Margin

Product

Gross Margin

Net Margin

Average gross margin of the industry varies from 12%

to 15% where Average net margin ranges from 6% to
8%. On the right is product wise prot margin
segregation of some items of the industry.

Tube well & Pump

10% - 12%

5% to 6%.

Industrial Spares

12% - 15%

6% to 8%.

Plastic Products

12% - 15%

6% to 8%.

Bicycle

15% - 18%

8% - 10%

Automobile Spares

9% - 11%

4% - 6%

Electrical Accessories

10% - 12%

5% to 6%.

SWOT Analysis
Strength
Availability of trainable labours at competitive cost.
Minimum Duty on import of basic raw material.
LES grows as a cluster at light engineering rms
accumulated areas which is good for vendor
development or clustering.
10% cash incentive for light engineering product export.
Weaknesses
Production facilities and technology are not
modernized.
Production management skills including TQM are at low
level.
Die-making technology is a bottleneck of LES in
Bangladesh.
Lack of technical institutions like metal testing, R&D,
quality assurance, accredited inspection.
Marketing ability is insufcient for export promotion.
Opportunities
Marketing size is huge in view of import substitution for
industrial machinery and spare parts.
Labor costs are increasing in rival countries in Asia.
Huge export potential as countrys geographical
location in-between India and China.
Government has been emphasizing on the industrys
growth.
With future industialization, LES has huge opportunity
for growth.
Threats
Absence of cluster development projects including
Common Facility Center.
No basic steel industry in Bangladesh.
Domestic market becomes reluctant to buy domestic
products.
No international quality and testing laboratory.
Little care taken to address environmental hazards and
human safety aspects at unorganized ship breaking
yards from where raw materials are procured.

Initiatives of Bangladesh Government to

develop LES
The Government of Bangladesh has declared the sector as a
most priority sector in its Export Policy 2003 - 2006 and
thrust sector in its Industry Policy-2005. The exporters of
light engineering products are enjoying 10% cash incentive
to boost the export earnings.
Government has also taken the following initiatives to
develop the industry:
Concentration on spare parts of automobiles, railway,
mills, factories and industries and maintenance work etc.
Concentration on capital machinery, bicycle, construction
equipment and spare parts of automobiles, industries,
factories mills and maintenance work etc.
Concentration on foundry, agro-machinery and spare
parts of mills, factories, industries, LPG cylinder and
maintenance work etc.
Concentration on activities in ship breaking,
Concentration on spare parts of automobiles, industries,
factories mills and maintenance work etc.
Product Country Map of Light Engineering Industries more
concentration on maintenance work, spare parts of mills,
factories and industries etc.
Exemption from customs duty on capital machineries.
Initiative to setup a modern light engineering part with
coordination with Bangladesh Small and Cottage
Industries Corporation (BSCIC) and Bangladesh
Engineering Industry Owners Association (BEIOA) under
PPP (Public-Private Partnership)