Capital machinery imports fall 45% in four years as industrial growth stagnates

Bangladesh's imports of capital machinery, medical gear, vehicles, and heavy equipment fell drastically by 45.1% over the past four fiscal years, coinciding with a marked slowdown in industrial growth and raising concerns over new investment and factory expansion.

Import volume fell from 2.26 million tonnes in FY2021-22 to 1.24 million tonnes in FY2024-25 before recovering by 13.7% to 1.41 million tonnes in FY2025-26 after three consecutive years of decline.

Over a broader 15-year period, the combined volume of these imports fell 41.5%, from 2.41 million tonnes in FY2009-10 to 1.41 million tonnes in FY2025-26, according to Chattogram Custom House data.

Import values, however, moved in the opposite direction, more than doubling by 152.7% from Tk13,653 crore to Tk34,497 crore over the same period, amid inflation and currency depreciation.

The trend has emerged alongside a sharp slowdown in industrial growth.

After growing 8.18% in FY2022-23, industrial growth slowed to 3.71% in FY2024-25 and further to 2.86% in FY2025-26, according to Bangladesh Bureau of Statistics data. The FY2025-26 figure is provisional.

The slowdown has come amid higher borrowing costs, foreign exchange shortages, difficulties in opening letters of credit, import restrictions, and persistent problems with gas and electricity supplies.

The prolonged weakness in machinery and equipment imports suggests weaker investment demand and could constrain the expansion of productive capacity, although import data alone cannot establish a decline in overall domestic investment.

Investment losing momentum

Naser Uddin Chowdhury, former vice-president of the Bangladesh Garment Manufacturers and Exporters Association, said businesses are increasingly reluctant to undertake large-scale investments because of uncertainty over financing and utility supplies.

Talking about the sector, he said Bangladesh remains heavily dependent on imported woven fabrics, particularly from China, while domestic knit fabric production has expanded significantly.

Around 90% of knit fabrics can now be sourced locally, but woven fabrics still rely heavily on imports, Naser said. "If we can produce 100% of our fabrics locally, both woven and knit, we can retain more foreign exchange," he said.

However, setting up large textile factories requires substantial capital, reliable gas and electricity supplies, and affordable financing. Investors are reluctant to take such risks when these conditions cannot be guaranteed, he said.

"If the government can ensure uninterrupted gas and electricity and arrange low-cost financing, investors in Bangladesh are ready to invest," Naser said.

He called for a five-year government plan to expand domestic production capacity in sectors where Bangladesh remains heavily dependent on imports.

Four-year slide

The decline in the combined imports covered by the customs dataset has been particularly pronounced since FY2021-22.

In that fiscal year, Bangladesh imported 2.26 million tonnes of capital machinery and related goods worth Tk30,406.20 crore. The volume fell to 1.51 million tonnes in FY2022-23, 1.45 million tonnes in FY2023-24, and 1.24 million tonnes in FY2024-25.

Import values, however, remained relatively high at Tk28,130.14 crore, Tk28,233.38 crore, and Tk29,417.22 crore, respectively, during those three years.

The volume then recovered to 1.41 million tonnes in FY2025-26, while the import value rose sharply to Tk34,497 crore.

The figures show that the contraction was not simply a one-year disruption. Businesses reduced imports of machinery and equipment used to establish new production lines, build factories, or expand existing capacity for several years before the partial recovery in FY2025-26.

The longer-term rise in import value alongside lower volume also highlights a significant divergence between the physical quantity of equipment entering the country and the total value of those imports.

However, the customs data do not by themselves show whether the divergence resulted from higher prices, changes in the composition of imported equipment, or other factors.

Import dependence persists

SM Abu Tayyab, president of the Chattogram chapter of the International Business Forum of Bangladesh, said rising population and consumption are naturally driving import demand, but Bangladesh should replace imports with domestic production where commercially feasible.

"If the commodities we import can gradually be produced domestically, it would be much better for the economy," he said, calling for a review of major imports and a government strategy to boost local production.

Heavy import dependence leaves Bangladesh vulnerable to external shocks, including wars, supply chain disruptions, and changes in global trade policies, he said, adding the garment sector remains a major example of this dependence. 

Despite being the country's largest export-oriented manufacturing industry, it continues to rely heavily on imported raw materials, particularly woven fabrics.
High cost of investment: Professor Mohiuddin Chowdhury of the University of Chittagong's Department of Finance said the decline in machinery and equipment imports reflects weaker investment demand and could constrain the expansion of domestic productive capacity.

"When capital machinery imports decline, it indicates a downward trend in domestic production," he said.

Higher interest rates, taka depreciation, dollar shortages, and difficulties in opening letters of credit are discouraging investment, while rising import costs are raising production expenses and weakening local manufacturers' competitiveness, he said.

"Businesspeople are not getting adequate gas and electricity supplies. If they do not get proper utility services, how can they produce?" he said.

Global trade uncertainty, including changing tariff and bilateral trade policies, also poses risks to Bangladesh's export sector, he said.

Weaker domestic production combined with higher import costs could put further pressure on the economy as businesses become more reliant on imports to meet domestic demand.

Consumption grows, investment lags.

Amirul Haque, president of the Chattogram Chamber of Commerce and Industry, said rising imports also reflect the expansion of Bangladesh's consumer economy, as higher incomes, employment, and consumption drive demand for food, consumer goods, and other
commodities.

But growing consumption needs to be matched by increased productive capacity. Machinery imports are closely linked to industrial investment, so a sustained decline could constrain capacity expansion unless domestic machinery production can compensate.

For Bangladesh, the challenge is therefore not simply to reduce imports. It is to maintain investment in productive capacity while developing domestic production in sectors where local manufacturing is commercially viable.