Automobile policy hits the road, aims to cut import

Bangladesh will cut its over-reliance on imported vehicles, switch to electric modes of transportation and become a regional hub for automobile manufacturing by 2030 as the government unveiled the country’s first-ever policy to develop the sector.

The Automobile Industry Development Policy 2021 promises to offer tax and export incentives to encourage entrepreneurs to establish automobile plants in the country.

As per the policy, investors will get the opportunity to import capital machinery and equipment to make cars at zero duty.

Besides, commercial vehicle manufacturers will get duty-free access for the import of auto parts for four years.

Investors will get concessional loans to market locally manufactured commercial vehicles, according to the policy issued by the industries ministry on Tuesday.

The local automobile industry has been considered as a potential industrial sector for the last two decades as it has registered impressive growth and contributes greatly to the national economy.

The sector is nearing critical mass thanks to its ability to adopt new technologies and increased efficiency in human resource management.

“Bangladesh’s automobile industry could even become a part of the global supply chain in the future,” the policy said.

The growing demand for cars and motorcycles is a result of the rise in purchasing power among the general public, it added.

The policy aims to provide a clear roadmap on how to take the country’s evolving automotive ecosystem forward.

The policy discourages the import of completely built-up units of used vehicles as locally assembled cars are more affordable than the imported ones.

The government will attract both local and foreign investment, the policy said. The authorities will set standards for locally manufactured vehicles in keeping with global benchmarks.

The government will help local manufacturers to enter new markets.

“Progressive leasing policy will be pursued to help locally-made automobiles expand their markets,” said the policy.

Investors will be encouraged to set up plants to produce parts and assembling factories for cost-efficient cars, three-wheelers, bus, trucks, tractors and ambulances.

Local consumers will be given an income tax rebate for buying “Made in Bangladesh” vehicles.

Abdul Matlub Ahmad, chairman of Nitol-Niloy Group, said the policy would help Bangladesh become an automobile manufacturing nation.

“Customers will benefit as they will get vehicles at affordable prices.”

Thanks to the policy, local manufacturers would be able to sell a sedan car within Tk 10 lakh as customers would not have to pay import duties, according to the entrepreneur.

The government will draw up a reconditioned car management guideline to support the firms involved in running reconditioned car businesses and local manufacturers.

An automobile scrapping policy will be formulated. The government will impose anti-dumping taxes to prevent dumping and unfair trade practices.

A one-time 100 per cent duty and tax waiver would be extended for the imports of machinery to set up CKD factories.

The total tax incidence will be 25 to 35 per cent for CKD level manufacturers for imports of parts. It will not be more than 10 per cent if parts are sourced locally, the policy said.

Factories will be entitled to a 1 per cent tax rebate if they spend 1 per cent of their annual income on research and development.

The policy looks to transform a majority of the vehicles, particularly passenger cars, buses, trucks and three-wheelers, into electric vehicles by 2030.

A 10-year tax holiday would be provided to the EV assemblers or manufacturers.

In order to ensure higher production of EVs and keep the emission level to a minimum level, the government would offer financial incentives, waiver of road tax and reduced registration fee for a certain period.

Charging stations and battery recycling industries would be set up, the policy said.


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