The government has proposed extending tax incentives for electric buses and trucks until June 30, 2030, as part of broader measures to accelerate electric vehicle (EV) adoption and curb urban air pollution in the fiscal year 2026–27 budget.
The initiative also aims to reduce dependence on imported fossil fuels and support a gradual shift in the transport sector toward cleaner alternatives.
Under the proposed changes, tax structures on imported electric vehicles would be significantly eased. For EVs priced up to $25,000, the total tax burden is set to fall from 93 percent to 64 percent.
Vehicles in the up to $50,000 category would see a reduction in tax incidence to 80 percent.
The budget also proposes easing costs for plug-in hybrid electric vehicles (PHEVs). Supplementary duties on imported hybrid vehicles would be reduced, while regulatory duties on vehicles with engine capacities of up to 1,800cc would be removed entirely.
As a result, the total tax incidence on PHEVs up to 1,800cc is expected to decline from 93.16 percent to 73.44 percent. For PHEVs up to 2,000cc, the tax burden would drop from 132.36 percent to 96.10 percent.
In a separate proposal, the government plans to raise taxes on fossil fuel-powered vehicles. Imported cars with engine capacities between 1,200cc and 1,600cc would face a higher total tax burden of 155.88 percent, up from 132.36 percent.
The proposal also removes all customs duties and taxes on imported EV chargers and charging stations, a move industry stakeholders say is crucial to addressing infrastructure gaps.
Market participants say the combined measures could reshape investment trends in the country’s automotive and transport sectors.
E-bike importer Mahamudur Rahman said lower duties would immediately stimulate demand.
“If duties come down, the market will expand rapidly and we will consider fresh investment,” he said.
Distributors also expect ripple effects across retail networks.
“Lower prices will boost sales, and that means we will need more showrooms and service points,” said one distributor.
Entrepreneurs in assembly and manufacturing say the policy could create new employment opportunities if local value addition becomes viable.
“If local assembly becomes viable, we will have to hire additional workers,” said assembly-line entrepreneur Nazmul Islam.
Automotive executives believe Bangladesh could emerge as a regional hub if policy support continues.
“With the right policy support, Bangladesh could become a strong e-bike hub in the region,” said automotive executive Rubel Ahmed.
On the consumer side, affordability remains a key concern and a major barrier to adoption.
“I will definitely buy an e-bike if the price drops. It will be much more affordable,” said university student Shariful Islam.
Delivery riders, who are highly sensitive to fuel costs, also said they would benefit from lower prices.
“I need an e-bike to cut fuel costs, but the current price is too high,” said rider Ripon Sheikh.
Another student, Shamshul Arafin, said cheaper EVs would make daily commuting more practical.
Analysts say a more accessible EV market could have wider economic implications beyond transport, particularly in employment generation.
An industry analyst said the sector could expand rapidly if affordability barriers are removed.
“If e-bikes become affordable, this could become one of the fastest-growing segments of the small transport economy,” the analyst said.
Despite growing interest, Bangladesh’s e-bike sector remains at an early stage, with limited domestic manufacturing capacity and heavy reliance on imports.
Stakeholders, however, said the proposed duty cuts could encourage private investment and gradually shift urban mobility patterns toward cleaner alternatives.
Policy experts, however, cautioned that fiscal incentives alone would not be sufficient. They said success would depend on parallel investment in charging infrastructure, maintenance systems and clearer regulatory frameworks.
The proposal reflects the government’s broader ambition to reduce carbon emissions and improve urban air quality, particularly in densely populated cities where transport remains a major source of pollution.