The proposed national budget for fiscal year 2025–26 introduces steep changes to the duty and tax structure on key raw materials used in rod and cement production, with industry stakeholders warning that the move is likely to drive up prices for both materials, raising overall construction costs.
Finance Adviser Dr Salehuddin Ahmed presented the proposed budget for the 2025-2026 fiscal year, amounting to Tk7,89,999 crore, in a televised speech on Monday.
According to the proposed tariff revisions, the production cost per ton of rod is expected to increase by Tk900, while cement production costs may rise by at least Tk40, reports Bangla Tribune.
Traders caution that this increase will directly affect individual builders and developers, as well as large-scale infrastructure projects.
The biggest change for the cement industry is the overhaul of the duty on clinker, the primary raw material for cement.
Previously, a fixed duty of Tk700 per ton was in place.
Under the new budget, this has been scrapped in favor of a value-based duty system, with rates set at 25%.
For manufacturers with in-house clinker production facilities, the duty rate is reduced to 15%.
A cement industry entrepreneur told Bangla Tribune that the new structure will increase clinker import costs by an average of Tk437 per ton. "As a result, the retail price of cement could rise by Tk9–10 per bag."
In 2024, Bangladesh imported nearly 20 million tons of clinker. With the new tariff regime, the government could earn an additional Tk800 crore in revenue from the sector.
However, analysts point out that the ultimate burden of this cost will fall on consumers.
The rod manufacturing sector is facing similar pressure.
The government has withdrawn the fixed customs duties on imports of scrap metal, sponge iron, and pig iron—key inputs in rod production and replaced them with value-added taxes.
As a result, the tax on scrap metal imports will increase from Tk2,000 to Tk2,400 per ton.
Duties on sponge and pig iron have been raised by Tk300 per ton.
VAT on rod production has also seen a notable hike—from Tk2,200 to Tk2,700 per ton.
Industry insiders say the combined effect of increased rod and cement prices will inevitably raise costs in both private and public construction projects.
This is likely to put additional pressure on housing affordability for middle and lower-middle income groups.
Furthermore, government development projects may need budget revisions to accommodate the rising cost of materials.