Grey phone market costs Bangladesh up to Tk6,000cr a year: Industry leaders

The massive grey market for smartphones is draining the national exchequer of an estimated Tk5,000-6,000 crore in annual tax revenue, according to the Mobile Phone Industry Owners' Association of Bangladesh.

Speaking at a press conference titled "Towards a Safer Bangladesh through NEIR" at a hotel in the capital today (6 January), Ziauddin Chowdhury, country manager of Xiaomi Bangladesh and an executive member of the association, called for the immediate and strict implementation of the National Equipment Identity Register (NEIR) system to safeguard local manufacturing, curb illegal device circulation, and protect consumer rights.

"Nearly 20% of the smartphones entering the country are illegal or through the grey market. This accounts for a revenue turnover of nearly Tk10,000 crore that stays outside the official channel, depriving national revenue of significant tax gains," Ziauddin said.

He explained, "Official sales for phones priced above Tk30,000 have effectively hit a wall. We have the manufacturing capacity and the skills, but we cannot compete with grey market products that evade the 43% tax bracket. If NEIR is implemented, this segment will grow, and prices will eventually become more reasonable as manufacturing scales up."

Addressing recent protests by a section of mobile traders, the association executive member rejected claims that 20,000 shops and 20 lakh families would be affected by the NEIR.

"Our research, conducted by Insight Metrics Ltd, shows there are approximately 13,000 retail points in Bangladesh selling smartphones. Out of these, 90% already sell official products. Only about 1,000 to 1,500 shops deal exclusively in used or unofficial phones. The claim of massive unemployment is a fabrication intended to gain public sympathy," he said.

While supporting the government's revenue goals, Ziauddin also urged the authorities to review the current 43% tax on smartphones in the upcoming budget.

"Smartphones should not be seen just as a luxury item for one-time tax collection. They are a tool for recurring revenue – driving MFS, data usage, and digital banking. Making smartphones more affordable will accelerate the country's digital growth," he said. 

Speaking at the event, the association president, Jakaria Shahid, said, "It is a misconception that we only 'patch up' or assemble imported parts. Our members have already moved from basic assembly to advanced manufacturing stages, including SMT (Surface Mount Technology) and PCBA (Printed Circuit Board Assembly) production."

He pointed out that local manufacturing now accounts for a value addition of 15% to 20%, a figure comparable to neighbouring countries. 

The association president reiterated that a structured channel, secured by NEIR, is the only way to ensure that high-end official phones become affordable through increased production scale and reduced overheads.