Domestic passenger vehicle production in Bangladesh remains limited five years after the introduction of the national automobile industry policy in September 2021.
The policy aimed to increase local output, reduce import reliance, and position Bangladesh as a regional car manufacturing hub by 2030 through tax benefits, reduced import tariffs, and various incentives.
At least five entities assemble passenger vehicles domestically. They include the state-owned Progati Industries alongside private firms Fair Technology, Rancon, and Meghna Group.
Industry participants argue that implementation has lagged far behind the original framework’s targets.
Implementation fell short of expectations even though the policy provided correct directional guidance for the development of the vehicle industry, said Subrata Ranjan Das, managing director of ACI Motors.
Das said building investor confidence requires a stable tariff structure, a clear incentive framework, and rapid approval procedures.
A shortage of charging stations constrains sector expansion. Energy supply constraints, financing difficulties, a lack of skilled personnel, and inadequate facilities for recycling used batteries also limit growth.
The government has already held two rounds of discussions with relevant stakeholders regarding the proposed Automobile Policy 2026-2031, said Mir Masud Kabir. He is the managing director of Bangladesh Auto Industries Limited.
Concerns over executing existing policies persist.
The administration intends to raise electric vehicles to 30 percent of total vehicle market sales by 2030, Kabir said. He said necessary emphasis on overall automotive industry development remains missing.
Private investment attraction and the setup of vehicle assembly plants have shown some progress, said Taskin Ahmed. He is a director of Ifad Autos PLC.
Actual production, technology transfer, and local component manufacturing capabilities remain at a limited stage, Ahmed said.
International automotive makers continue to introduce new investment plans.
Japan’s Toyota Tsusho Corporation plans to establish a hybrid electric vehicle production plant inside a domestic economic zone, aiming to start construction in 2027 and commence full-scale production by 2029.
Concurrently, local firm Runner Automobiles PLC entered a partnership with Chinese electric vehicle maker BYD to manufacture electric vehicles locally.
Tax regulations present distinct financial burdens for local manufacturers.
Rules set import duties at 35 percent for painted vehicle bodies in completely knocked down form. They set duties at 25 percent for unpainted bodies, provided the enterprise operates its own industrial plant.
Electric vehicles where both body manufacturing and painting occur domestically face a reduced tariff of 3 percent. Performing only the painting process locally incurs a 15 percent duty.
Anisuzzaman Chowdhury explained that building a modern, factory-based paint shop requires an estimated 35 lakh to 50 lakh US dollars.
Such a large investment is difficult for many local vehicle assemblers to bear, Chowdhury said.
Individual assembly operations build an average of only 300 to 500 vehicles annually.
Setting up costly infrastructure is unprofitable for most participants because the domestic market is comparatively small. This reality prompts proposals to approve smaller, garage-style painting facilities.
Chowdhury urged authorities to guarantee rapid customs clearance for imported components at ports. He warned that twenty to 30 containers of knocked-down parts held up by delays can wipe out producer profits.
Meghna Automobiles invested nearly 2 crore US dollars into operations over the past five years, according to Chowdhury. He called for policy revisions to offer local entrepreneurs more effective backing.
Abdul Mannan Khosru is the former president of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA). He questioned whether genuine manufacturing capabilities are being built under current policies.
Domestic activity still consists primarily of importing parts from abroad for assembly, Khosru said.
