Major tariff changes likely to protect local industries, boost domestic production

The FY2026-27 budget, scheduled to be placed in parliament
today (11 June), is expected to bring wide-ranging changes to the import duty
and tax structure to support local industries, encourage import-substitute
production and improve the competitiveness of domestic manufacturers, according
to finance ministry and National Board of Revenue (NBR) sources.
The expected measures include duty
relief on raw materials for several industries, alongside higher import duties
on a range of products to protect local producers.
Under the proposals, the existing
45% supplementary duty on imports of float glass – a key raw material used in
the production of washing machines, electric ovens and microwave ovens – may be
fully withdrawn.
The proposal also seeks to extend existing concessional and
duty exemption facilities on raw material imports used in the production of LPG
cylinders, auto tanks, valves and bungs until 30 June 2027.
In another move, the existing 10%
supplementary duty on imports of synthetic woven fabrics may be withdrawn.
Overall, these expected measures
aim to strengthen protective tariff support for local industries while reducing
production costs through duty concessions on essential raw materials.
Abul Kasem Khan, chairperson of
Business Initiative Leading Development, told TBS that rational reductions in
duties and taxes help encourage local production and improve industrial
competitiveness.
"When the government reduces
duties on raw materials and inputs used in value-added production, it creates
positive impacts on local industries, employment generation and the broader
economy," he said.
Bangladesh needs a business-friendly tariff structure to support industrial
growth and attract new investment amid current economic realities, he said.
"These expected measures will
boost entrepreneurs' confidence and encourage production expansion. We hope to
see such measures reflected in the budget," he added.
Protection for gypsum board, resin, transformers
To protect the local gypsum board and
sheet manufacturing industry, a new 20% regulatory duty has been proposed on
imports of those products.
The proposal also includes raising
the existing 5% import duty on PVC resin (polyvinyl chloride) and PET resin
(polyethylene terephthalate) to 10% to support domestic manufacturers.
Domestic producers say the measures
would help reduce reliance on imports and encourage investment and production
expansion in local industries.
To strengthen the domestic
transformer industry, the government is also considering increasing the import
duty on transformers with capacities of up to 1kVA from 10% to 25%, along with
a new 5% regulatory duty.
Higher duties on appliances, bicycle parts
To protect the local washing
machine industry, a new 20% supplementary duty has been proposed on imports of
all types of household washing machines.
The proposal also recommends
increasing the import duty on freewheels, a locally produced bicycle component,
from 15% to 25%, along with an additional 5% regulatory duty to protect the domestic
market.
Protective measures for paper, copper, steel industries
To support local paper
manufacturers, import duty on greaseproof paper and glassine paper may be
increased from 10% to 25%, with an additional 5% regulatory duty.
The proposal also includes a 10%
regulatory duty on imported copper wire and an increase in import duty on
copper tubes from 15% to 25%.
A further 10% regulatory duty may
be imposed on imports of cold-rolled and coated coil sheets to protect domestic
manufacturers.
Lower duties on industrial raw materials
Import duty on five raw materials,
including ball clay, a key input for the refractory cement industry, may be
reduced to 5%.
The proposal also includes a 1%
import duty on linear alkyl benzene (LAB), one of the main raw materials used
in detergent production.
Import duty on five raw materials
used by the local float glass industry may be reduced from 25% to 15%.
To encourage domestic coffee
processing, the government may fully withdraw the existing 5% regulatory duty
on bulk imports of coffee extract, essence and preparations.
Higher duties for maize starch, motors and polyester
Import duty on maize starch may be
increased from 15% to 25% to support local producers.
A new 10% regulatory duty may be
imposed on imported DC motors with capacities below 1,200 watts to strengthen
local manufacturing.
The proposal also includes a 5%
duty on imports of polyester staple fibre to encourage domestic production of
the import-substitute product.
Benefits for tyre, beauty product manufacturers
The government is considering
concessional import facilities for two raw materials used by local tyre and
tube manufacturers.
For skincare and beauty product
manufacturers, the existing 30% supplementary duty on imports of two raw
materials may be reduced to 10%.
New concession notification
The government is also considering
issuing a new notification on concessional import facilities for industrial raw
materials to support industrial expansion and job creation.
Hospitals, universities and other
public service institutions may also receive advance tax exemption facilities
on imports of capital machinery and spare parts similar to those available to
manufacturing industries. Officials expect the move to help reduce costs in the
health and education sectors.
Duty benefits for ETP chemicals, coal imports may continue
To encourage environmentally
friendly industrialisation, the government is considering extending the
existing duty exemption facility on imports of chemicals used in effluent
treatment plants (ETPs) until 30 June 2027.
The proposal also seeks to continue
existing duty and tax concessions on coal imports for power plants until 30
June 2030.
Md Shaheen Ahmed, president of the
Bangladesh Tanners Association (BTA), told TBS that continuing the duty
exemption on ETP-related chemicals would help reduce environmental management
and operating costs for industries, making it easier to maintain production in
line with environmental regulations.
He said the measure could encourage
environmentally friendly investment, particularly in leather and other
export-oriented industries.
















