"Made in Bangladesh" on a phone box has become a familiar sight, and for several years it was a fair description of where the industry was going. The latest figures point the other way.
According to the Bangladesh Telecommunication Regulatory Commission, local firms produced 16,29,000 handsets in the year to June 2026. The same period a year earlier produced 21,47,000. That is a fall of 5,18,000 units, or 24.1 per cent, in twelve months.
The number that explains it
Several things are blamed — the tax structure, logistics costs, a shifting market. But the figure that organises all of them is this one: by BTRC's own estimate and the industry's, 40 to 50 per cent of the handset market is unauthorised stock. On expensive phones the gap between a legally imported handset and a grey one is widest, which is exactly where a local assembler would otherwise make its margin.
The revenue loss attributed to that trade is Tk 5,000 to 6,000 crore a year.
A tax cut that was tried, then withdrawn
The government did act. Import duty on phones was cut from 25 per cent to 10 per cent, effective from January to June this year, on the reasoning that narrowing the price gap would pull buyers back into the legal market.
After June the reduced rate was not continued, the stated conclusion being that legal imports and local production had not risen enough to justify it.
The combined tax burden on an imported phone then went from 43.43 per cent to 64.25 per cent.
What that looks like beside the neighbours
The comparison is the uncomfortable part of this story.
- Bangladesh — 64.25%
- India — about 22 to 24%
- Pakistan — 15 to 25%
- Nepal — 18 to 25%
- Sri Lanka — 15 to 20%
- Maldives — close to zero, being entirely import-dependent
An investor deciding where in South Asia to put a handset plant reads that table before anything else. So does a smuggler.
Why a six-month tax cut could not have worked
There is a reasonable case that the experiment was not given the conditions to succeed, and it is worth stating because the same decision will come up again.
Six months is shorter than the planning cycle of the trade it was meant to change. An importer committing to legal channels has to arrange financing, warranty support, BTRC registration and retail relationships, and none of that is worth building for a rate that may lapse in two quarters. A grey importer, by contrast, needs none of it and can wait. The cut asked the legal trade to make a long commitment against a short guarantee, and the illegal trade to make no commitment at all.
That the rate then rose to 64.25 per cent did not restore the previous position. It made the gap the grey market exploits larger than before the cut was tried.
What it means in Bangladesh
For a buyer, this is the arithmetic already visible in Dhaka's shops, and the price gap on the iPhone 18 is the same mechanism at the top of the market.
For the industry it is more serious. A handset assembly plant is one of the few manufacturing routes a country can use to move from importing finished goods to making them, and it is usually the first step toward components. Twenty-four per cent in one year is not a dip in demand — the phones are still being sold, just not made here.
And the revenue argument cuts both ways. Tk 5,000 to 6,000 crore is lost to a market that exists because the legal price is high; raising the legal price raises the loss. The policy question is not whether the duty is too low but whether anyone has modelled what the grey market does at each rate, which is a different and harder piece of work than setting a number in a budget.
Sources: BTRC production and market data, and Samir Ashaf's analysis for Prothom Alo.
