Budget proposes tax breaks to boost local fertiliser, pesticide production
Finance Minister Amir Khosru Mahmud Chowdhury announced the proposal while presenting the national budget in parliament today
The proposed budget for fiscal year 2026-27 includes a VAT exemption on 36 raw materials used in pesticide manufacturing to strengthen the domestic agrochemical industry, reduce reliance on imported finished products and boost local production.
Finance Minister Amir Khosru Mahmud Chowdhury announced the proposal while presenting the national budget in parliament today (11 June).
The budget also proposes scrapping the existing 7.5% advance tax on imports of all agricultural pesticides, alongside VAT and customs duty concessions for fertiliser production.
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The finance minister said the government aims to achieve self-sufficiency in zinc sulphate fertiliser production by reducing the import duty on zinc ash, a key raw material, to zero percent. It also proposes withdrawing the 7.5% VAT currently imposed at the commercial stage on agricultural fertilisers.
Industry insiders say local manufacturers face a tax burden of 30% to 58% on imported raw materials, including up to 15% VAT, putting them at a disadvantage against importers of finished pesticides.
According to the Bangladesh Agrochemical Manufacturers Association (BAMA), around 20 local companies produce pesticides in Bangladesh. In the Tk750 crore market, multinational companies account for 55% of sales, local importers 41%, and domestic manufacturers just 4%.
Officials believe the proposed tax relief will lower production costs, support the growth of local industry and help reduce fertiliser and pesticide prices for farmers.
BAMA President KSM Mostafizur Rahman said the industry had long sought tax relief from the National Board of Revenue and the agriculture and commerce ministries.
"Imported pesticides face only 5% customs duty, while raw materials for local production are taxed between 30% and 58%. This has made imports more profitable than manufacturing locally," he said.
He welcomed the proposed measures, saying they would encourage domestic production and reduce dependence on imported agrochemicals.
