Export Potential of Handicraft Sector

Handicraft is considered an important sector of employment and income generation within the non-agricultural sector in rural and urban areas. A large part of the labor force employed in this local raw material-dependent industry is women.  Sustainable economic development is largely dependent on empowering women through economic self-reliance. The Handicraft sector also plays a crucial role in sustaining the cultural heritage of Bangladesh. [1] Handicrafts have been making a special contribution to the national economy since the 1970s as a tool for the development of Bangladesh’s tradition, culture, and poverty alleviation. Export of the sector is also increasing over the years.[2]

According to the Survey on Handicraft Establishment Bangladesh 2022 by Bangladesh Bureau of Statistics, the Handicraft industry is mainly driven by bamboo and cane, followed by pottery, Tepa Puppetry, Nakshi Kantha, and Kurushkantha products. about 44 percent Handicraft establishments are bamboo and cane based though nowadays there is scarcity of homegrown bamboo and cane. Bangladesh has a total of 73,542 Handicraft establishments across the country, of which 97.6 percent are household-based. The industry is dominated by female entrepreneurs, who own 51.2 percent of the establishments, while their male counterparts own 48.8 percent. A total of 1,48,656 people are engaged in the Handicrafts industry, with 95.8 percent belonging to households-based businesses and 4.2 percent from separate establishments. Of the workers, 55.8 percent are female and 44.2 percent are male. 56 percent of the women workforce of this sector are housewives.[3] The sector emerges as a source of partial employment for the formally unemployed women. 38 Handicraft clusters are available in the 177 SME clusters.[4]

According to the Grand View Research 2022, the global Handicrafts market size was estimated at USD 678.24 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 4.7 percent from 2023 to 2030. Over the last 5 years Bangladesh’s export of Handicraft sector has seen a CAGR of 8.3 percent. According to a study by BFTI, 50 percent of the key informants interviewed believed this sector would see 5 to 15 percent export growth in the next five years.[5]

Export data indicated that Bangladesh exported US$29.75 million worth of Handicrafts in FY2022-23 and the sector is experiencing continuous positive growth. Major export destinations of Handicrafts products (chapter 46) of Bangladesh include Spain, UK, Australia, Germany, France, Italy etc. Bangladesh mainly exports rugs (made of jute and other natural fiber) baskets, and basketware (made of cane, rattan, seagrass, etc.). terracotta handmade tiles, jute bags, carpets, mats (made of jute and other natural fibres), nakshi kantha and etc. to the global market. Bangladesh has experienced less imports of Handicraft products since the industry is well served by the local manufacturers. In 2022 total imports of Handicrafts amounted to USD 0.22 million. 

Various policy supports are provided to this industry, for instance, the government developed National Handicraft policy in 2015 to ensure well-organized development of the Handicrafts sector, however, the policy has not been implemented yet. Export Policy 2021-24 and National Industrial Policy 2022 identified Handicrafts as one of the Special Development Sectors. The government now provides 8 percent cash incentives to the export sector of Handicraft products [6] which was 20% in 2020. Also, income derived from the export of Handicrafts is exempted from tax. Moreover, the government is also supporting the artisans and entrepreneurs involved in this sector through the Small and Medium Enterprise (SME) Foundation, Jute Diversification Promotion Centre (JDPC), Joyeeta Foundation, Bangladesh Small and Cottage Industries Corporation (BSCIC) etc.

The handicraft industry encounters internal challenges or weaknesses like lack of R&D and design centers, lack of government’s strategic focus towards development of this sector, limited access to finance, inadequate financial literacy of the entrepreneurs, shortage of skilled Artisans, absence of organized supply chain, shortage of raw materials, insufficient cash incentives, lack of HS code-wise identification of handicraft products etc. hindering exports of the sector. Moreover, external challenges like global market competition (from top exporters like China, India, Vietnam), insufficient country branding, low-cost substitute products in the market, soaring cost of raw materials, etc. are threatening the export potentials of Handicraft sector.

Despite the challenges, handicraft sector exhibits strengths like inherited craftsmanship, availability of a variety of raw materials, traditional crafts clusters, ability to produce unique, customized products, support from government agencies and NGOs, etc. which enabling the sector to grow and enhance exports. 

Product diversification opportunity exists through diversified leather Handicrafts, handloom fashion items, jute items, products of manmade fiber, soil saver, paper bag, basketwork, wickerwork, bamboo mats, plaiting materials of bamboo and rattan, plaits and similar products of non-vegetable plaiting materials, etc. 

Market diversification opportunities in sector are prevalent in countries like USA, France, Japan, Italy, UAE, Saudi Arabia, Canada, etc.