Bangladesh Automobiles Assemblers and Manufacturers Association has urged the government to provide locally assembled and manufactured plug-in hybrid electric vehicles with the same tariff benefits and incentives as electric vehicles, warning that the proposed budget may discourage domestic investment in the automobile sector.
In a letter sent to the National Board of Revenue, the association said the proposed budget creates a policy imbalance by significantly reducing duties on imported completely built-up PHEVs while offering no corresponding incentives for local assembly and manufacturing.
According to BAAMA, the budget proposes reducing the total tax incidence on imported CBU PHEVs of up to 1,800cc from 93.16 per cent to 73.44 per cent, while duties on vehicles with engine capacities between 1,801-2,000cc would fall from 132.66 per cent to 96.10 per cent.
At the same time, the government has introduced special incentives for local EV manufacturing under SRO No 163-Law/2026/18/Customs, but has not included any similar provision for PHEV production despite the growing popularity of hybrid vehicles in the country.
BAAMA president Hafizur Rahman Khan said the proposed tariff structure would make imported vehicles more attractive than locally produced ones, weakening incentives for manufacturers to invest in domestic production facilities.
‘Instead of encouraging local value addition, employment generation and technology transfer, the current proposal favours imports of fully built vehicles. This runs counter to the government’s long-term industrialisation goals and could slow the development of a competitive automobile manufacturing ecosystem in Bangladesh,’ he said.
The association argued that Bangladesh is currently in a transition phase from conventional fuel-powered vehicles to fully electric mobility, making PHEVs a practical and commercially viable bridge technology.
Industry experts estimate that PHEVs can reduce fuel consumption by 40–60 per cent, ease pressure on foreign exchange reserves through lower fuel imports, and contribute to reductions in carbon emissions.
BAAMA said that unlike fully electric vehicles, which still face challenges due to limited charging infrastructure and high battery costs, PHEVs are already gaining widespread consumer acceptance and could play a crucial role in accelerating the country’s shift toward cleaner transportation.
Data from the Bangladesh Road Transport Authority show that hybrid vehicles accounted for 57 per cent of newly registered vehicles in 2025, up from 42 per cent in 2021.
In contrast, fully electric vehicles represented only 0.57 per cent of registrations last year.
The association warned that failing to support local PHEV manufacturing could jeopardise ongoing investments by both domestic and foreign companies.
Global automotive brands such as Hyundai, Mitsubishi, Chery and Proton have already established partnerships with local firms, while Chinese EV giant BYD has initiated plans to set up a manufacturing facility in Bangladesh with Runner Automobiles Limited.
BAAMA said investors could become reluctant to expand production if imported CBU vehicles continue to enjoy greater fiscal advantages than locally assembled alternatives.
The association further noted that the proposed measures depart from the internationally recognised principle of tariff escalation, under which higher duties are imposed on finished products while lower duties and incentives are provided for local manufacturing and value addition.
It also said the proposal appears inconsistent with the government’s Automobile Industry Development Policy 2021, which pledges attractive fiscal support to promote local production of fuel-efficient and environmentally friendly vehicles by 2030.
To safeguard investment, create jobs, encourage technology transfer and build a sustainable automotive manufacturing base, BAAMA called on the government to grant locally assembled and manufactured PHEVs the same tariff concessions and incentives currently available to EV producers.