Key tyre imports face 20% supplementary duty, traders warn of higher transport costs

A proposed 20% supplementary duty on some imported tyre categories in the FY2026-27 budget may raise transport costs and add to inflationary pressure, warn traders, transport operators and an economist.

Infographics: TBS

Customs data show the sharpest rise is proposed for light commercial truck and bus tyres, whose total tax incidence would increase from 64.25% in FY26 to 96.10%.

Importers estimate that prices of such tyres and those used in pickup vans could rise up to Tk4,000.

Industry representatives said the revised tax measures, including supplementary duty and regulatory duty on selected categories, would raise the cost of tyres used in transport, agriculture, construction and industrial operations.

"As the country's economy runs on wheels, and wheels require tyres, any sharp increase in tyre prices will eventually affect the entire economy," Al-Haj Main Uddin Ahmed, president of the Chattogram Tyre Tube Importers and Distributors Group, told The Business Standard.

According to market research firm MarkNtel Advisors, Bangladesh's tyre market is projected to reach $230 million in 2026, with the aftermarket segment accounting for around three-fourths of demand. The firm also says Bangladesh depends on imports for nearly 90% of its annual tyre requirement.

Importers say this dependence makes the proposed tariff changes more sensitive for transport, agriculture, construction and industrial users.

While local manufacturers produce some passenger vehicle tyres, traders said heavy-duty and specialised tyres remain largely import-dependent.

Local tyre manufacturers, however, welcomed the proposed duty hike, saying it would support domestic production and encourage fresh investment.

Mustafizur Rahman, general manager of sales at Meghna Innova Rubber Company Ltd, a subsidiary of the Meghna Group and the company behind Bangladeshi brand MTF Tyre, said local producers have sufficient capacity to expand output in the categories covered by the revised duties.

"Local manufacturers are capable of increasing supply and meeting demand in the segments where the duty hike has been proposed," he said.

There are currently seven tyre manufacturers in the country. Higher duties on imports will help the local industry grow and encourage further investment, he added.

Car, tractor tyre taxes rise

Customs data show the total tax incidence on passenger car radial tyres would rise from 93.16% in FY26 to 96.10% in the next fiscal year.

For tractor tyres, tax will increase from 17.88% to 33.63%, while industrial heavy equipment tyres rise from 61.88% to 64.25%. Another category of commercial truck and bus tyres would remain unchanged at 45.88%.

Industry representatives said the increase is steep for a product that is not a luxury item but an input used across productive sectors.

Traders estimate that the revised duties could raise retail prices across several tyre categories.

Passenger car tyre prices may increase by up to Tk700 per unit while tractor tyres may see a rise up to Tk5,000. Industrial heavy equipment tyres could increase by Tk70,000.

Mohiuddin Chowdhury, professor of finance at the University of Chittagong, told The Business Standard, "For a truck requiring eight tyres, the extra cost could stand at Tk32,000-Tk40,000 and transport operators are likely to pass on the additional cost through higher freight charges.

"As transport costs rise, prices of goods carried by those vehicles, including daily essentials such as vegetables and other agricultural products, will also increase."

He described the impact as a "multiplier effect", where a cost increase at one stage of the supply chain gradually spreads across sectors before reaching consumers.

He questioned the rationale for imposing a tax burden that could raise tyre prices by more than 30%, warning that such a sharp increase could add to inflationary pressure.

Transport operators, importers seek review

Chowdhury Zafar Ahmad, secretary general of the Bangladesh Covered Van-Truck-Prime Mover Goods Transport Owners Association, said transport operators were already under pressure from higher costs.

"The transport sector has already been under pressure due to the fuel price hike, which has led to increased freight charges. If tyre prices rise further, the pressure will intensify and ultimately affect inflation," he said.

Mohammad Muktar Hossain, vice-president of the group, said importers are paying duties based on an assessment value higher than the import value.

"We import tyres at $2.5 per kilogram, but the assessment value has been fixed at $3 per kilogram. As a result, we pay around Tk4,500 in duty for tyres imported at a cost of Tk3,100," he said.

"After the proposed 20% supplementary duty, which was previously zero, the duty payable on a tyre imported at Tk3,100 would rise to around Tk7,000."

Stakeholders urged the National Board of Revenue and relevant ministries to review the proposed measures in consultation with importers, transport operators and local manufacturers.