Bangladesh to sign Tk608cr deal with China for military drone plant
The Tk608.08 crore project includes Tk570.60 crore for opening letters of credit (LCs) and making payments to import and install the plant and related technology
Highlights:
- Bangladesh plans G-to-G deal with China for drone factory
- Finance ministry approved Tk608 crore UAV manufacturing project
- Bangladesh Air Force to implement project with Chinese CETC technology
- Project enables domestic drone manufacturing, reducing import dependence
- Payments spread over four years within existing Air Force budget
- Proposal approved with strict financial conditions and oversight
Bangladesh plans to sign a government-to-government (G-to-G) agreement with China to set up a military drone manufacturing facility, enhancing the country's air defence capabilities.
Ahead of the formal signing, the finance ministry on 6 January approved a project proposal – officially titled "Establishment of Manufacturing Plant and Transfer of Technology (ToT) for Unmanned Aerial Vehicles (UAVs)".
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The Tk608.08 crore project includes Tk570.60 crore for opening letters of credit (LCs) and making payments to import and install the plant and related technology, according to a copy of the proposal seen by The Business Standard.
Of the total amount, Tk570.60 crore will be disbursed over four fiscal years: Tk106 crore in the current year, Tk155 crore each in FY2026-27 and FY2027-28, and approximately Tk154.60 crore in FY2028-29.
The remaining Tk37.47 crore will be paid in local currency to cover LC opening charges, VAT and SWIFT charges.
When asked about it on Saturday, Finance Adviser Salehuddin Ahmed told TBS, "I will not comment on the establishment of a drone plant or the import of fighter jets."
When asked about the approval of the proposal to set up a drone plant and the import of ToT, he said, "There are many discussions about which country the fighter jets will be purchased from. Therefore, I will not talk about drones or fighter jets right now. Let everything be finalised first."
Bangladesh Air Force will implement the project with technology supplied by China Electronics Technology Group Corporation (CETC) International, a state-owned Chinese defence electronics conglomerate, according to the proposal.
The project is intended to enable the Bangladesh Air Force to manufacture and maintain drones domestically, a move officials say could reduce long-term reliance on imports.
When contacted, Inter-Services Public Relations (ISPR) Directorate officials declined to comment on the matter.
Before the finance ministry's approval, Chief Adviser Muhammad Yunus, who is also the adviser in charge of the defence ministry, approved the proposal.
Officials said the Bangladesh Air Force will not require any additional budget allocation to import the drone manufacturing plant and the transfer of technology. The expenditure can be covered from the annual allocation under the "other machinery and equipment" head in the Air Force budget.
A joint committee formed by the armed forces had earlier given policy approval – following negotiations – to procure the drone manufacturing plant and ToT, with payments to be made over either the FY25 to FY28 period or the FY26 to FY29 period.
According to the minutes of a coordination meeting held in September 2025, chaired by Chowdhury Ashik Mahmud Bin Harun, executive chairman of the Bangladesh Investment Development Authority (Bida), the Bangladesh Air Force (BAF) is partnering with China to establish an unmanned aerial vehicle (UAV) or drone manufacturing plant in Bangladesh through a technology transfer agreement.
Multiple attempts by TBS to contact Ashik, seeking information on the matter last Wednesday, were unsuccessful as he did not answer. He saw the question sent to him on WhatsApp regarding the issue, but did not respond.
Proposal approved on five conditions
The finance ministry approved the proposal, subject to five conditions. These include meeting the current fiscal year's expenditure from existing allocations, without seeking any additional budget for this procurement, according to the approved proposal.
From the next fiscal year to FY2028-29, the required funds must be managed within the Bangladesh Air Force's approved annual budget ceilings. All payments must comply with prevailing financial rules and be executed through letters of credit (LCs).
The ministry also stipulated that the approved funds cannot be used for any purpose other than the proposed contract.
China's state-owned CETC International initially quoted Tk643.61 crore, including shipping costs. However, after discussions between Bangladesh Air Force officials and representatives of the Chinese company in November, the contract value was renegotiated and reduced by Tk35.53 crore to Tk608.07 crore.
According to CETC International's website, the company is China's only large-scale technology corporation covering all areas of electronic information, including defence electronics, security electronics, and informatisation, with its products reaching more than 110 countries.
In defence electronics, CETC has developed seven main product systems: air base early warning, integrated electronic information systems, radar, communication and navigation, electronic warfare, UAV electronic equipment, and integrated IFF.
Its security and electronic information portfolio includes public security, e-government, intelligent transportation, new energy, components, and other related products and services.
