Tyre importers oppose new duties, allege 'astronomical profits' by local manufacturers 

Tyre importers and traders have accused local manufacturers of earning what they described as "astronomical profits" under the shelter of high import duties, arguing that proposed tax measures in the FY2026-27 budget would further increase costs for transport operators, farmers and consumers.

At a press briefing in Chattogram today (25 June), leaders of the Chattogram Tyre Tube Importers and Distributors Group criticised recent statements by the Bangladesh Tyre-Tube Manufacturers and Exporters Association (BTMEA), alleging that domestic producers are seeking additional protection despite enjoying tariff support for more than two decades.

The traders said the proposed 20% supplementary duty on light truck tyres and 15% VAT on agricultural tyres would raise transportation and farming costs nationwide, ultimately pushing up consumer prices.

Reading out a written statement, the group's Joint General Secretary Saifuddin Ahmed questioned the rationale for extending protection to an industry that has long benefited from tariff barriers.

"If an industry cannot become competitive after receiving protection for such a long period, why should farmers, transport owners, traders and consumers bear the cost of that failure?" he questioned.

Vice President Moktar Hossain responded to journalists' questions at the briefing, which was also attended by President Main Uddin and General Secretary Mohammad Shahjahan.

Allegations of price hikes

The traders alleged that some domestic manufacturers sharply increased tyre prices after production at Gazi Tyres halted following the political changes of 5 August.

According to their claims, prices of 5.50-13 and 155-13 size tyres rose from around Tk4,730 to Tk7,450 per unit, an increase of about 57.5%.

They further alleged that a light truck tyre costing roughly Tk3,200 in the international market is being sold in Bangladesh at more than double that price.

"This kind of price gap indicates supernatural profits and warrants investigation by the relevant authorities," the statement said.

Impact on transport and farming

The importers rejected BTMEA's claim that the proposed supplementary duty would have only a marginal impact on transport costs.

They argued that local manufacturers' calculations are based on a tyre lifespan of 1,50,000 kms, whereas tyres in Bangladesh typically last only 30,000-40,000 kms because of road and operating conditions. As a result, transport operators must replace tyres more frequently.

The group estimated that the proposed duty could add Tk500-Tk800 to the cost of a transport trip, affecting the prices of food, agricultural produce, construction materials and other consumer goods. Given that more than 90% of freight in Bangladesh moves by road, they warned of broader inflationary effects.

The traders also opposed the proposed VAT on agricultural tyres, saying farmers are already struggling with rising costs of fertiliser, diesel, labour, machinery and transport. Any increase in tyre prices for agricultural equipment would add to production costs and eventually contribute to food inflation, they said.

They also challenged the argument that higher duties would save foreign exchange, noting that the tyre industry still depends heavily on imported raw materials, including rubber, steel cord, carbon black and chemicals.

Call for policy review

The traders urged the government to withdraw the proposed supplementary duty on light truck tyres and the VAT on agricultural tyres. They also called for an independent review committee involving all stakeholders to assess the impact of industrial protection measures and publish a comprehensive economic assessment of the proposed tax changes.

While expressing support for domestic industrialisation and employment generation, they argued that industrial protection should not come at the expense of consumers, farmers and transport operators.

Manufacturers reject allegations

Responding to the allegations, Lutful Bari, chief executive officer of Meghna Tyre Factory (MTF) and vice-president of BTMEA, rejected claims that local manufacturers are earning excessive profits.

Referring to concerns over the proposed supplementary duty, Bari said MTF provides a warranty of up to 40,000 kms on its tyres.

"Even if we accept their claim that a tyre lasts between 40,000 and 50,000 kms, the proposed duty would increase operating costs by only Tk0.06 per km per tyre. That means around Tk6 per tyre for every 100 kms, which is negligible," he told TBS.

On the allegation of excessive profits, Bari said tyre pricing is subject to regulatory scrutiny.

"There is a VAT authority to monitor these matters. We declare our prices, and the government verifies the documents and imposes VAT accordingly," he said.

However, an MTF dealer, Shaju Motors, questioned the company's warranty claim, saying no warranty cards or written documents are provided to dealers, making it difficult to offer any formal warranty to customers.