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1 Ans Light Engineering prospects and challenges

Asked by AL MaMun (4 Golds) Saturday, 19 Dec 2020, 09:09 AM at (Jobs Job Preparation)

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👉Light Engineering refers to the production of less capital intensive products compared to 

heavy engineering, and that which is catered to the needs of end consumers or other 

manufacturing businesses. One such industry, that has been recognized as the thrust sector, and 

currently contributing about 2.2% of the GDP, is the light engineering industry. The Light 

Engineering sector, serving as the cornerstone of many other manufacturing industries 

like Textile, Paper, Cement, Jute, Sugar, Railway and Food Processing, has been termed as the 

“mother of all sectors” in Bangladesh. There are about 50,000 micro, 10,000 small and 

medium light engineering businesses mostly self-financed, operating in clusters across the 

country with active participation of about 8 million people. The local market size, conforming 

to one third of the domestic demand, amounted to USD 3.125 billion in the year 2017-18 with a 

30 percent annual growth rate

👉Bangladesh, being the third largest non-EU exporter of bicycles, has contributed 12 percent 

to light engineering exports in the year 2017-18. Then again, the agro-machinery sector is 

flourishing rapidly with 32% demand being met by the light engineering industry. The agro-

machinery industry size is USD 1.2 billion and growing at a rate of 12 percent CAGR. The 

level of mechanization in the agro-industry is yet to reach its full potential, as only 5 out of 11 

core agri-processes have adopted mechanization.

👉The spare parts sector is also progressing rapidly with a market of USD 309 million with 

80% products locally produced. The automotive sector is no less, having grown three times in 

the last 10 years to USD 175 million with a CAGR of 10.8%

👉Exports of light engineering products have reflected a spiraling growth momentum until 

2017. The products are mainly exported to European Union, Japan, China, India, Australia, 

Africa etc. Light engineering products earned USD 688 million in the year 2016-2017, but this 

number radically dialed down to USD 355.96 million in 2017-18 which is 55 percent less than 

the predicted earnings.

Leading Impediments To Progress

Old methods slow down processes

Backdated, substandard traditional processes have set quality and overall productivity on the 

wane. The enterprises lack the minimum technology

Below standards raw material with no testing facility

The sector’s raw material source is driven by ship scraps. These inputs are of low grade quality 

and often the workers have no formal education in materials science and engineering

High Interest Rates

Manufacturers having the minimum production capacity but maximum production costs, 

require consistent financial assistance for maintaining or expanding operations

Government Policy Support

Government has declared light engineering products as “the product of the year 2020”. [1]


fact that the product has been in the limelight for quite a period of time, has been mirrored in 

the activities and policies of our government.

Fiscal incentives

 Various cash incentives are provided, for example 15% cash incentives are enjoyed by 

bicycle exporters.

Non-fiscal incentives

 Government has recognized light engineering products as one of the thrust sectors and 

has developed appropriate policies. Over the years, 2015-2018 and 2018-2020, these 

policies have been formulated so as to aid the industry through:

1. Lower rates of interest

2. Temporary Prohibition of income tax

Ease on export credits

 National Farm Mechanization Policy, that has been approved this year, is expected to 

drive growth of agro mechanization. The policy will provide 50-70 percent incentives to 

farmers for buying agro-machinery. Even though this policy is not aimed at the light 

engineering industry directly, increased agro-mechanization brought about by this policy 

will have a ripple effect on the light engineering sector growth.[12]

 A plan to develop “Light Engineering Cluster Village” in the outskirts of Dhaka city has 

been devised to further drive industry growth.

The Future Aheadl

Even though the majority of the deterrents of this industry are being addressed by the 

government through the policies discussed; there are some salient steps yet to be taken in order 

to secure a better future.

Extending policy support

Government and financial institutions should further extend their support, to help the industry 

realize its full potential. For example, capital machinery imports have only one percent import 

duty and no value added tax; whereas the local production of an identical capital machinery will 

have fifteen percent value added tax starting from this July. Such barriers should be entirely 

eradicated for sustained industry growth.

Establishment of common facility centers

Common facility centers should be introduced in large clustered areas, so that any sort of 

assistance like marketing centers, testing laboratory centers, quality measuring centers can be 

provided to a group of industries in the same area. This could help alleviate operational costs, 

investment at the same time boost technology, time management and research and development. 

This means existing products will be upgraded and new product innovations will be facilitated.

Facilitate collaboration and technology transfer with foreign counterparts

This would help solve the scarcity of technical know-how issues by helping the industry 

revitalize traditional processes with appropriate knowledge and technology.

Better quality control

BSTI, Bangladesh Industrial and Technical Assistance Center (BITAC) and other certification 

bodies should strengthen the industry with technical assistance and support them in 

incorporating sophisticated technology for improved quality control in order to develop 

products of international standard.

Conclusion: All these aforementioned steps coupled with increased university-industry 

collaborations , can help light engineering products live up to the notion of being the product of 

the year 2020 and therefore emerge as one of the prominent sectors of Bangladesh.

Answered by AL MaMun (4 Golds) Saturday, 19 Dec 2020, 09:10 AM

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