16 December countdown: Can Bangladesh shut down 90% grey phone market?

Highlights:

• NEIR will register all phones and disconnect unregistered devices
• Grey market dominates due to steep official handset taxes
• Officials say NEIR curbs tax evasion and protects local manufacturers
• Traders warn enforcement threatens millions of livelihoods nationwide
• Huge price gaps fuel demand for unofficial imported smartphones
• Government vows strict action despite risks of hardship and backlash

The government plans to activate the National Equipment Identity Register (NEIR) on 16 December, a move aimed at bringing every mobile handset under mandatory registration and eventually disconnecting all unregistered or unofficial (grey) devices.

While regulators describe the step as essential for tackling tax evasion and fraud, industry insiders, traders and consumer rights groups argue that shutting down a market that supplies most of the country's handsets will be extremely difficult.

According to the Bangladesh Telecommunication Regulatory Commission (BTRC), more than 60% of mobile phones in use are unofficial. Sector associations claim the real figure is closer to 90%, making it one of the largest grey markets in the region.

This massive market share is driven purely by the steep tax differential. Official handset imports face a colossal 57% cumulative tax, while local manufacturing incurs around 35% tax. Grey market dealers pay virtually nothing, allowing them to offer the same products at nearly half the official price.

Why BTRC plans to block unregistered phones

Mohiuddin Ahmed, president of the Bangladesh Mobile Phone Consumer Association, starkly highlighted the disparity: "The price of officially imported handsets is, in many cases, double that of the unofficial sets. This disparity is why the market has become so large, and people naturally opt for the unofficial route."

Following the nationwide rollout of mandatory SIM registration in 2016, the then government made multiple attempts to introduce handset registration as well. However, none of those initiatives could be implemented. This time, the BTRC has revived the effort with financial backing from domestic handset manufacturers, who argue that controlling illegal imports is essential to sustaining local production.

The government maintains that once NEIR becomes operational, local mobile phone manufacturers will be encouraged to scale up production, which will ultimately help reduce handset prices in the country.

At a press briefing last month, BTRC Chairman Emdadul Bari said that all mobile phones currently active on the country's mobile networks will be automatically registered before the system goes live on 16 December.

However, any handset that connects to the network for the first time after 16 December must undergo mandatory registration, he said. The BTRC will also introduce a system allowing users to register second-hand phones or devices brought as gifts from abroad.

Infograph: TBS

How NEIR will work

The BTRC chairman said unregistered phones will be allowed a three-month grace period, during which users will receive SMS alerts, after which the BTRC will technically disconnect them.

"Our purpose is to make handsets affordable and safe," Bari said. 

He said, "We cannot reduce prices while large volumes of illegal and refurbished sets enter the country. NEIR will help detect these devices and protect domestic manufacturers."

BTRC officials say the initiative aims to curb tax evasion, prevent handset cloning and financial fraud, and support local manufacturing, which now includes around 18 companies producing or assembling mobile phones.

Huge price gap

The current market structure is shaped by significant price differences between official and unofficial devices. Bangladesh imposes a 57% import duty on mobile phones; this increases prices far above grey-market alternatives.

For example, Samsung's flagship S25 Ultra officially retails for Tk236,000, while retailers such as Dazzle offer for about Tk1,05,000 with one-year insurance.

The iPhone 17 Pro Max is sold unofficially for Tk165,000, while its official price is Tk250,000.

 "We import original phones from Dubai or Malaysia. These are unofficial, but the sets are original," a Dazzle sales representative at Jamuna Feature Park Shopping complex told TBS.  

The launch of the NEIR process has raised concerns that mobile handset prices in Bangladesh could rise sharply, potentially affecting the government's plan to expand internet access nationwide. 

Md Aslam Uddin, president of the Mobile Business Community, said imported phones carry a 57% duty, and when combined with other costs, official handset prices often double. "After NEIR implementation, there is a real risk of price increases," he noted.

BTRC Chairman Bari, however, expressed optimism that local manufacturers could keep prices competitive if their interests are protected. "Our goal is to make handsets affordable and safe. Since 2018, based on BTRC guidelines, around 18 local companies have been producing phones, meeting most domestic demand. 

He said the NEIR will help curb illegal and low-quality refurbished imports, giving local producers a sustainable advantage.

Bari also mentioned that the BTRC has asked the government to reduce taxes on imports and local production, including for phones like Samsung and iPhone that are not yet produced locally.

NEIR overseer Aminul Haque said grey market traders pay no taxes, creating unfair competition for legitimate businesses.

"We cannot reduce prices because many illegal or refurbished sets enter the market, and we cannot always detect them. NEIR will finally allow us to identify these devices and protect legal manufacturers," he said. 

Bangladesh currently sells 3.2-3.5 million smartphones every month, industry data shows. Around 80-85% of annual smartphone sales nearly 30-32 million units are Android devices, overwhelmingly dominated by brands like Xiaomi, Samsung, Vivo, Oppo and Realme, Infinix, and Tecno.

Photo: Mint

Livelihoods at risk

The grey market supports an estimated 10-15 lakh livelihoods involving over 20,000 retailers and traders. Many fear the sudden shift will devastate a large, long-established ecosystem.

Aslam said, "For 15 years, we have run licensed shops openly. Now the phones we sell are being called illegal. If this business shuts down, lakhs of people will lose their livelihood."

The announcement has triggered alarm among the trade community. The Mobile Business Community president warned that the move would significantly obstruct the government's goal of increasing handset penetration and spreading internet access to the grassroots.

He said, "Our market share is 90%. Now they are calling the product we sell illegal. Across the country, 10 to 15 lakh livelihoods rely on this trade. If this business is suddenly shut down, they will starve."

Mohiuddin Ahmed also blamed regulatory indecision. He said these traders grew because regulators tolerated it. "If they collapse now due to policy reversal, who will take responsibility?"

He alleged that NEIR is being financed by mobile manufacturers, creating scope for monopoly-driven incentives.

Zakaria Shahid, president of Mobile Phone Industry Owners' Association of Bangladesh (MOIB), defended the move, stating that domestic manufacturers, with 18 companies currently producing phones, are not seeing adequate returns on their investment due to the grey market.

He expressed concern that the initiative might once again be derailed by unknown reasons, as happened during previous attempts.

Challenge of a soft launch

The BTRC is aware of the potential backlash, especially after previous NEIR attempts failed in 2016 and 2021.

BTRC Chairman Bari acknowledged the difficulty of implementing cybersecurity measures without causing public hardship.

"We can shut down many things starting 16 December. But the biggest challenge is handling the terrible suffering that will descend upon people's lives."

He outlined a cautious strategy. "We are starting very loosely or very mildly. We will tighten the rope gradually, step by step."

The chairman concluded that while NEIR is expected to create a sustainable solution for local producers to market phones at competitive prices, the success hinges on the government's willingness to also take initiatives to reduce taxes on both import and local production to rationalise the market and prevent massive price inflation.

Manufacturers push for full enforcement

Local manufacturers insist that NEIR must be fully implemented to protect their investments. MOIB President and Edison Group Managing Director Zakaria Shahid said the grey market undermines legitimate businesses. "This time we hope there will not be any unknown reasons delaying implementation."

"To implement the system effectively, dialogue with the grey market is essential," said Mohiuddin Ahmed. 

He said there must be business opportunities for them as well, including reduced taxes and import privileges. Without this, the successful rollout of the NEIR process will not be possible.

Government stance hardens

Meanwhile, Faiz Ahmad Taiyeb, chief adviser's special assistant on telecom, said, "We cannot make laws by negotiating with smugglers. We are giving traders time. After NEIR, there will be only black or white, no grey [market]."

Citing National Board of Revenue (NBR) data, he noted that the state loses around Tk500 crore annually due to illegal handset imports.

Meanwhile, in a press release yesterday afternoon, Taiyeb said, "Illegally imported, smuggled, and cloned phones will be shut down. There will be no compromise on this."

The special assistant further said, "Illegal phones are associated with incidents such as sending bulk SMS regarding gambling links and MLM fraud, crimes related to mobile financing, non-payment of various patents and technological royalties, and evasion of income tax and customs duty. 

"This also obstructs the development of the local handset manufacturing industry."

He added that no one will be allowed to illegally dump millions of phones into the country a year in advance by evading tax. "We are clearly stating that no mobile businesses or shopkeepers are having their trade destroyed; they will sell phones produced domestically and those imported legally, and they will conduct business honestly."