Bangladesh tyre manufacturers have said the proposed budget could expand domestic production and reduce import dependence in a Tk4,700 crore annual tyre import market, while warning that uneven protection, input cost pressures and procedural bottlenecks continue to constrain full industry growth.
At a press conference in the capital on Monday, the Bangladesh Tyre-Tube Manufacturers and Exporters Association (BTMEA) said the budget marks a partial but incomplete shift towards domestic industry support through selective tariff adjustments, value-added tax (VAT) measures and incentives.
The sector remains structurally import-dependent despite huge installed production capacity, leading to underutilised factories, foreign exchange outflows and persistent imbalance across tyre categories.
Budget addressed pains, but the protection gap persists
BTMEA said the budget imposed a 20 per cent supplementary duty on light truck tyres and introduced value-added tax (VAT) on agricultural tyres, alongside offering duty and tax incentives for electric vehicle-related sectors.
Agricultural tyre taxation corrects a long-standing distortion where domestic production faced VAT while imports did not, but added that overall protection remains below that of regional competitors.
Past policy gaps contributed to shutdowns of several domestic factories, resulting in lost investment and employment, while current measures only partially address that structural deficit.
India has imposed strict restrictions on tyre imports since 2020, while total tax incidence in Pakistan remains over 50 per cent, and ranges from over 50 to over 80 per cent in Sri Lanka, depending on categories, according to the association.
For self-sufficiency in the 25 lakh motorcycle tyre market
BTMEA said there are around 40 lakh registered motorcycles in the country. Annual motorcycle tyre demand stands at approximately 25 lakh units, comprising about 15 lakh units of end-user replacement demand and around 10 lakh units from the two-wheeler assembly industry.
The association said it makes motorcycle tyres the largest domestic demand segments, currently import-dominated, leading to significant foreign exchange outflows.
It said Bangladesh has installed production capacity in motorcycle tyres but remains import-dependent due to weak tariff protection and a lack of mandatory local sourcing by assemblers.
BTMEA said aligning protection and enforcing domestic procurement in the assembly ecosystem would allow factories to operate at full capacity and reduce import reliance.
BTMEA Vice President Md Luthful Bari, CEO of Meghna Tyres, said the budget measures could attract new investment and improve utilisation of underused capacity.
He said Meghna Group is planning to invest around Tk1,000 crore in a radial tyre manufacturing facility and expects improved competitiveness of local products against imports.
Jamuna Tyre General Manager Sohel Rahman said the sector generates around 12 indirect jobs for every direct job and highlighted that Bangladesh imported tyres worth around Tk4,700 crore last year.
Costs, claims and policy disputes intensify
BTMEA rejected claims by tyre importers that the light truck duty increase would significantly raise transport costs.
It said the 20 per cent supplementary duty would raise the price of a standard 7.50–16 inch imported tyre from about Tk10,450 to Tk13,758, an increase of around Tk3,308, which it described as marginal in the context of total logistics cost.
It added that for vehicles operating around 1,50,000 kilometres, the per-kilometre cost impact remains negligible—only Tk0.002.
The association said past market trends, including price declines in segments such as easy bike tyres, show that increased domestic competition tends to reduce prices rather than raise them. Local production has already halved easy bike tyre prices.
On revenue, it said declining import duty collections reflect structural import substitution rather than fiscal loss, adding that VAT from domestic production represents a more stable and sustainable revenue base.
Input costs still rising
BTMEA raised concerns over proposed increases in duties on key raw materials essential for tyre manufacturing.
These include rubber accelerator, where customs duty is proposed to rise from 5 per cent to 10 per cent, iron wire, where a 5 per cent regulatory duty is proposed, and MS nipple, also facing a proposed 5 per cent regulatory duty. It said these increases would raise production costs and weaken competitiveness against imported finished tyres.
The association said that the budget offered duty and tax benefits for supplying to electric vehicle manufacturers, but access for three-wheelers remains constrained due to policy complexities and slow approvals from designated authorities.
It demanded easing rebate claims and simplifying access to statutory regulatory order-linked incentives.
It also demanded mandatory use of locally produced tyres in selected electric vehicle categories, noting that domestic capacity already exceeds demand in three- and four-wheeler segments.
BTMEA said major domestic groups, including Jamuna Group and Meghna Group, are expanding investment in tyre manufacturing, including Meghna Group’s planned Tk1,000 crore radial tyre project, signalling a gradual shift towards self-sufficiency that needs policy alignment.
