Local entrepreneurs, who currently meet around 30% of the country's demand for adhesive products, are strengthening their base by exploiting the potential of the growing industry.
Over decades, many industrial groups have come forward to invest in the once import-dependent sector.
Star Adhesive Ltd, which was incorporated in Bangladesh in 2013, has decided to expand its business by raising Tk5 crore from the stock market.
Akij Group has also planned to invest around Tk150 crore in the rising industry, according to industry insiders.
Besides, many small entrepreneurs have come into this sector following the reopening of the economy, they have claimed.
Market insiders say the demand for adhesive – an important ingredient in various sectors such as footwear, furniture, and packaging – is increasing gradually in the current market.
Although the Indian company Pidilite Industries has been doing business under the Fevicol brand for decades, the journey of the adhesive industry began in the country in the late 1970s with Bengal Group.
The demand for adhesive products in the country is reportedly around Tk600 crore every year, of which 70% are still import-dependent. Now Fevicol controls more than 40% of the market.
Most of the adhesives used in export-oriented industries are imported from abroad.
Industry insiders say the Covid-19 pandemic had put their business in a precarious position, but it is now turning around.
But the price of industrial raw materials has increased by about 40% in the international market and the shipment cost has gone up by about 50%, resulting in post-pandemic challenges for the industry.
Again, the local industry cannot withstand the unequal market competition with the products imported through a misuse of bond facilities. As a result, many companies are surviving with just a small margin.
"Many industrial entrepreneurs are coming here to invest as the demand for adhesive products has increased in the country. It is particularly large industrial entrepreneurs, who import products by using the bond facility, who are moving forward," said Atiqul Islam Bashir, secretary general at the Bangladesh Adhesive Manufacturers Association.
"On the other hand, small entrepreneurs are struggling to survive in the unequal competition."
He alleges that many large companies import goods on bond facilities with false declarations.
"Against the requirement of just one tonne of raw material, they are bringing in 50 tonnes through false declarations. The rest of the amount is sold in the local market," said Atiqul Islam Bashir, who is also managing director at MK Bless World (BD) Ltd.
He said the raw material of adhesive products is also being imported with misinformation in the name of plastic products. As a result, such individuals are importing higher tariff products with lower tariffs, creating an unequal competition in the market.
"We pay a maximum duty of 37% on the import of raw materials at various levels but they do not need to pay this duty on importing goods using the bond facility. As a result, they can manufacture products at lower costs," he added.
Md Shibbir Hossain, head of Business Development at Partex Star Group, said the annual growth of the adhesive industry is 15%.
"The group plans new investments amid growing demand in the adhesive industry. Star Adhesives Limited is entering the stock market as part of the plan," he added.
The most common manufacturing items in the sector are rubber adhesive, resin adhesive, PUR adhesives, distemper adhesive, solvent cement, hot melt glue, super glue, silicone, wood preservative, NC thinner and spray paint.
Pidilite Industries, Bengal Group, RFL Group, Fast Group, Berger Paint, and Star Adhesives are the market leaders.
Fevicol, Dr Fixit, Fevikwik and Star Bond and Gum King are the most common brands in the adhesive industry.