Traditionally known for jute and tea exports, Bangladesh's entry in ceramic export market is not that old. But the rapid growth this industry has witnessed is extraordinary. In fact, a silent revolution has been taking shape in this sector for the last few years contributing a lot to the country's overall development.

Present scenario
At present, Bangladesh is exporting its ceramic products to over 48 countries from all over the world. In 2006-07, Bangladesh exported ceramic products worth approximately US$32.80 million. According to the Bangladesh Ceramic Manufacturers Association (BCMA), the ceramic sector in the country has every potential to grow and it will soon become a big foreign exchange earner in the coming years.  

Given this present scenario, Indian companies should seek opportunities to take active part in the development of Bangladesh's ceramic sector. There are broadly three fields of opportunity Indian companies could consider-

• Raw materials export
• Machinery supply, and
• Production design and facilities.

Market study
Although the origin of Bangladesh's entry in the ceramic export market can be traced back to 1958, the country earned global repute for its quality ceramic products only recently. At present, there are 15 ceramic producing plants (12 private, 1 state owned and 2 joint ventures) in the country producing over 40,000 tonnes of ceramic products per annum. The main markets to which the aforesaid companies export to include Europe, Middle East, Scandinavia and the United States. This year, attraction has been so positive that Bangladeshi companies has already acquired advance orders for ceramic products worth Taka 3.0 billion (US$ 428 million) from the USA and different European countries. Keeping this in mind, the Bangladeshi Ceramic Manufacturing Association has projected annual export earning of US$100 million from 2008 onwards.   

High demand at domestic level
In Bangladesh, the supply condition of ceramic products is insufficient in comparison to the demand condition. Demand for ceramic products is high even at home as the local companies export much of the products to the international market. Most of the ceramic factories import ceramics mainly from China.

The demand-supply gap is also evident for float glass in the local market. At present, Bangladeshi local industries are capable of catering to only 25-30% of the local demand for insulators.

It is only due to the demand-supply gap, Bangladesh's imports of ceramic products are increasing very fast parallel to the growth in export. In the year 2006-07, for example, the country imported finished ceramic products worth US$44.12 million and exported ceramic products worth US$32.80 million.

Why the ceramic sector in Bangladesh lagging behind

• Lack of high level technology support.
• No international standard laboratory.
• High import duty on specific raw materials (15-30%).
• High VAT (15%) on produced goods.
• No government support through lower interest rates.

Opportunities for Indian exporters and investors

• Raw materials: In Bangladesh, there is a shortage of raw materials for the ceramic industry. Indian exporters could consider supplying raw materials such as bone ash, china clay, refectory materials, plaster of Paris and limestone to the Bangladeshi companies engaged in producing ceramic products.
• Machinery: Supplying industrial process machinery (such a kilns) to Bangladesh could be most profitable to Indian exporters as Bangladeshi companies are always looking for cutting edge technology in ceramic production to maintain their competitiveness.
• Laboratory: As stated earlier, Bangladesh has no international standard laboratory (for ceramic research) in the country. Indian companies in this field should seek opportunities to expand their operations in Bangladesh.
• Tableware:  Ceramic manufacturers in Bangladesh have projected US$100 million export earnings annually by end of 2008 and beyond. It can be assumed that the demand for raw materials and machinery required for ceramic finished item production will be very high in the coming years.
• Insulators: In Bangladesh, there is a huge supply gap (70-75%) for float glass in the local market, and, as a result, demand for insulator is more then any other ceramic product in the local market.
• Float Glass: Nowadays, more and more people in Bangladesh are interested in setting up new glass factories. This is why there is enough scope for Indian exporters to supply float glass to the local market.
• Talma or drinking water glass: In Bangladesh, there is high demand for drinking water glass factory.
  

With the increasing demand of ceramic products both at the domestic and international markets, all major Bangladeshi ceramic companies have been expanding their plants and operations. As a result, there is enough scope for Indian exporters keen to explore the overseas market as well as investors seeking joint ventures in the ceramic sector. While the exporters can pick up the aforesaid opportunities, Indian investors could consider setting up JVs with Bangladesh's local companies looking for potential partners capable of providing machinery on long term credit.