Govt to grant duty exemption on pesticide raw material imports

The government has decided to grant duty exemptions on the import of raw materials used in pesticide production, aiming to reduce dependence on finished product imports and strengthen the country's local agrochemical industry.

The move comes in response to a long-standing demand from the Bangladesh Agrochemical Manufacturers Association (Bama), which has argued that high import duties on raw materials have made it difficult for domestic producers to compete with foreign suppliers.

In a letter signed by Md Saiful Islam, deputy secretary of the Ministry of Commerce, and recently sent to Bama, the ministry confirmed plans to facilitate raw material imports and extend duty exemptions to encourage local manufacturing.

According to the letter, a meeting titled "Opening the Door to Local Pesticide Production and Export" was held at the Ministry of Commerce on 29 September, attended by representatives from 11 ministries and chaired by the commerce secretary.

Two key decisions were made at the meeting - first, the ministry will develop a framework, similar to that used for pharmaceutical products, to regulate raw material import approvals, pricing, and production oversight. Second, the list of eligible raw materials will be sent to the Ministry of Commerce for import facilitation and to the National Board of Revenue (NBR) for customs benefits and duty exemptions.

Currently, imported pesticides face only 5% customs duty, while raw materials for local production are taxed at rates ranging from 30% to 58%, making local production less viable. As a result, a large share of national demand is met through imports.

Industry leaders say that if raw material imports are made duty-free, local producers could reduce retail prices by at least 30%, benefiting farmers and promoting self-sufficiency.

At present, around 20 local companies, including National Agricare (NAC), Advanced Chemical Industries (ACI), and Square, are producing pesticides. The domestic market, valued at around Tk7.5 billion, is dominated by multinational companies, which hold 55% of the share, while local importers account for 41%. Domestic manufacturers currently occupy only 4% of the market.

Bama President KSM Mostafizur Rahman told The Business Standard, "We have long demanded this measure because high tariffs on raw materials have hindered local production. If the NBR and relevant ministries implement it properly, Bangladesh will no longer need to import pesticides within the next two to three years. Like the pharmaceutical industry, we can even start exporting."

Officials and industry stakeholders expressed hope that the duty exemption will pave the way for the development of a competitive, export-oriented pesticide industry in Bangladesh.