Commerce ministry proposes duty cut on EVs to ease fuel import pressure

Highlights:

• Government proposes duty cuts to boost electric vehicle imports
• EVs currently taxed higher than fossil fuel vehicles
• High fuel costs drive push toward electric transport
• Draft policy targets 30% EV fleet by 2030
• Incentives include tax cuts, financing, and reduced registration fees
• Adoption slow; industry urges focus on local EV manufacturing

Facing persistent energy pressures and rising fuel import costs, the commerce ministry is moving to accelerate the adoption of electric vehicles (EVs), particularly in commercial transport, by proposing significant duty reductions on their imports.

In a letter to the National Board of Revenue early March, the commerce ministry recommended lowering customs duty and supplementary duty on electric buses, trucks, dumpers and excavators to levels below those applied to conventional fossil fuel-powered vehicles.

The move is aimed at reducing operational costs in industrial and commercial sectors while cutting dependence on imported fossil fuels, ministry officials said.

Infograph: TBS

The proposal comes as Bangladesh grapples with a prolonged energy crunch, worsened by global oil and gas supply disruptions from the Middle East war. Officials said high fuel costs are already feeding into production and transport expenses, putting pressure on businesses and inflation.

"Current duty structures are discouraging EV adoption," said Shibir Bicitro Barua, additional secretary at the commerce ministry. "Electric vehicles face significantly higher taxes than fuel-based ones, which is counterproductive at a time when we are trying to reduce fuel dependency and manage energy costs."

He added that the commerce ministry wants to promote import of electric vehicles to phase out traditional ones.

Tax barriers for EVs

According to ministry data, importing a conventional diesel or petrol-powered bus attracts around 39.75% duty, while an electric bus faces about 93.16%. Similarly, fossil fuel-powered trucks are taxed at 39.75%, compared to 61.80% for electric trucks.

The gap persists across other heavy equipment. Electric dumpers and tippers are taxed at 61.80% versus 45.45% for conventional ones, while electric excavators face duties as high as 93.16%, compared to 28.73% for their fuel-based counterparts.

Such imbalances have discouraged businesses from switching to electric fleets, despite the long-term cost advantages of EVs, industry insiders said, adding that although electric vehicles have higher upfront costs, they significantly reduce fuel and maintenance expenses over time.

A typical diesel-powered heavy truck consumes between 25 and 40 litres of fuel per 100 kilometres, depending on load and road conditions. With diesel prices remaining volatile, transport operators face mounting operational costs. In contrast, electric trucks can cut energy costs by up to 40-60%, depending on electricity tariffs and usage efficiency.

Senior officials at the National Board of Revenue said the proposed measures are still under review.

"The government is keen to promote environmentally friendly vehicles," an NBR official said on condition of anonymity. "However, since the policy is still in draft form, there may be further revisions. Some proposals may be added, others refined."

Draft policy targets 30% EVs in govt fleet

The duty reduction proposal aligns with the draft Electric Vehicle Industry Development Policy 2025, which sets a target for at least 30% of government and corporate vehicle fleets to be electric by 2030.

The draft policy also proposes reducing import duties on completely built EV units to below 37%, alongside tax waivers on registration, advance income tax (AIT), and fitness certification for all kinds of electric vehicles until 2030. Registration fees could be cut by 50% under the plan.

Additionally, buyers may access bank financing of up to 60% of a vehicle's value, repayable over eight years, an incentive designed to ease the transition for businesses and institutional buyers.

Officials at the industries ministry said the plan focuses on replacing older fuel-run vehicles, especially in public transport and logistics. 

The previous interim government had formulated the draft Electric Vehicle Industry Development Policy in October last year, setting targets for transitioning towards green transport to reduce vehicular emissions.

Lagging in EV adoption

According to the International Energy Agency, EV sales crossed 20 million units in 2025, growing more than 20% year-on-year.

In China, EVs account for 12% of vehicle registrations and nearly a half of car sales in the domestic market. The global leader in the EV industry, China, reduced fuel import cost by 10% last year.

India and Vietnam have rolled out aggressive incentives, including tax cuts, subsidies and local manufacturing support, to accelerate EV adoption and reduce oil dependency.

In Bangladesh, however, adoption remains slow. Data from the NBR show 178 EVs were imported in FY25, and 82 in the first half of FY26. A plan to procure 400 electric buses is yet to be implemented.

Industry stakeholders have broadly welcomed the commerce ministry's proposal but stressed that local manufacturing must be prioritised over imports.

Hafizur Rahman, president of the Automobile Assemblers and Exporters Association of Bangladesh, said, "The world is moving towards electric vehicles, and Bangladesh must follow. But tax incentives should favour local production and assembly more than imports."

He said several companies have already invested in EV assembly and manufacturing, often in partnership with global firms. "If we ensure policy stability and protect these investments, the sector can generate employment and build backward linkage industries," he added.

Bangladesh Auto Industries Limited, one of the country's pioneering EV manufacturers, has completed construction of a factory on 100 acres in Chattogram's National Special Economic Zone, with an investment of Tk1,440 crore. However, production has yet to begin due to delays in gas connections.

Managing Director Mir Masud Kabir said high duties on imported components, currently around 61%, are a major barrier. "To develop a competitive EV industry, duties on parts must be lower than those on fully built vehicles. Export incentives would also help attract foreign investment," he said.

Meanwhile, Runner Automobiles Limited has recently signed an agreement with China's BYD to explore local assembly or production opportunities, signalling growing interest from global EV players.