The government has issued a policy aiming to facilitate the acquisition of sustainable and advanced technology among light engineering industries in a bid to expedite development in the sector, according to a gazette notification issued last month.
Under the policy, low interest loans will be provided from a special fund for the purchase of new technologies as well as the development of existing ones so that entrepreneurs feel encouraged to mechanise their production process.
In addition, the Light Engineering Industry Development Policy 2022 looks to ensure infrastructural development, easy financing and industrial incentives for the sector during its implementation between 2022 and 2027.
This is the first time that the government has framed a supportive policy for the light engineering sector.
The industries ministry had issued a notification on September 29, saying the policy will help light engineering industries flourish and increase their overall contribution to the country's gross domestic product to 40 per cent by 2027.
In January 2020, Prime Minister Sheikh Hasina declared light engineering as the product of the year to give it special attention for earning more foreign exchange through exporting various goods.
Light engineering, which is considered a thrust sector, was also given the highest priority in the Export Policy for fiscal years 2021-24.
Businesspeople say the industry may get a boost from the newly-framed policy as it offers a time-bound action plan for addressing the challenges hindering its growth.
The policy set 11 strategic targets to implement the action plan, such as developing forward and backward linkage industries, increasing human resources, research, and market expansion.
It also includes the development of industrial clusters, establishing common facility centres, quality assurance and certification, and financing and development of the investment environment.
As per the policy, Investors in the light engineering industry will be covered by insurance to protect against miscellaneous losses that may occur.
Besides, the government will ensure the required utilities, industrial sheds and IT infrastructure required by the sector by 2027.
Also, the Bangladesh Industrial Technical Assistance Centre will establish a raw material bank while the National Board of Revenue (NBR) will ensure buy-back management and tax incentives for light engineering products by 2025.
To ensure sustainable development in the sector, the Bangladesh Small and Cottage Industries Corporation will establish industrial clusters for light engineering across the country by 2022.
The policy also said the Finance Division and Bangladesh Bank would take initiatives to establish a venture capital fund to ease the production process of light engineering goods by 2025.
Meanwhile, the industries ministry, commerce ministry and NBR will ensure protection for the sector through providing export subsidies and updating the tax policy by 2025.
The policy says that entrepreneurs in the light engineering sector will get tax holidays and loans from the Green Development Fund for establishing compliant factories.
It also intends to develop "made in Bangladesh" brands both in local and global markets by ensuring quality and compliance standards by 2025, and increase export earnings from the sector.
Some 50,000 light engineering industries are operating in the country, making $8.2 billion worth of products each year.
Businesses operating in the foundry, manufacturing, repair and maintenance sub-sectors produce 10,000 types of light engineering products, according to a paper of the Bangladesh Engineering Industry Owners Association (BEIOA).
Light engineering is an important sub-sector of small and medium enterprises, which create innumerable employment opportunities and help the economy post higher growth.
Data from the Export Promotion Bureau shows that Bangladesh fetched $795.63 million from the export of light engineering products in fiscal 2021-22 while it was $529 million the year before.
In the first three months of the current fiscal year (July-September), the industry earned $144.39 million from exports, marking 21.43 per cent growth year-on-year, the data showed.
But in its latest report, the Bangladesh Institute of Development Studies identified an estimated 33.6 per cent skill gap in the sector.
Welcoming the government's move to form a policy for the light engineering sector, BEIOA President Abdur Razzaque said timely implementation of the plan will help the sector flourish, generate employment and increase export earnings as well.