The Bangladesh Auto Biscuit and Bread Manufacturers Association (BABBMA) has urged the government to revise the proposed national budget for FY26 by reducing the existing value added tax (VAT) on biscuits and bread.
The association warned that the current VAT rate is increasing production costs and pushing prices beyond the reach of low-income consumers who rely on these products as affordable daily food items.
Speaking at a press conference held on Wednesday at the association’s newly inaugurated office in Jiban Bima Tower, Dilkusha, BABBMA president Shafiqur Rahman Bhuiyan said: “Biscuits and bread are staple foods for millions of ordinary people. Yet the budget fails to reflect any relief or support for this essential agro-processing sector.”
He pointed out that in January 2025, an ordinance raised VAT on agro-processed food items, including biscuits, from 5% to 15%.
Following protests, the VAT on biscuits was reduced to 7.5%, but other items in the sector still face the higher rate.
This inconsistency is making the entire industry financially unviable, he said.
Bhuiyan also noted that BABBMA had submitted formal proposals to the government via the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) on March 20, requesting a VAT rollback to 5%.
“Unfortunately, none of our suggestions were reflected in the budget,” he added.
Agricultural entrepreneur and BABBMA executive member Mostafizur Rahman highlighted the broader economic context.
“Roughly 45% of Bangladesh’s workforce is engaged in agriculture, yet the sector contributes only 11–12% to GDP. To improve farmers' livelihoods, we must support agro-processing industries that add value to their produce.”
“If the government offers this sector comparative advantages—such as lower taxes or easier credit access—it would benefit not just local industry, but also farmers and the overall economy.”
The association also expressed frustration over the lack of implementation of the Agro-Processing Policy developed earlier with support from JICA and the Ministry of Industries. Under the policy, entrepreneurs were supposed to access soft loans at 5% interest, but no meaningful benefits have materialized so far.
They emphasized that industrial development is essential for national economic growth and that basic food items must remain affordable to the public.
Rising VAT directly impacts production costs, and ultimately, the consumer pays the price, Bhuiyan said.
BABBMA urged the government to immediately reduce VAT on biscuits from 7.5% to 5% and incorporate their budget recommendations to protect both industry and consumers.