The interests of domestic tiles manufacturers were not protected in the proposed budget of FY2021-22, say industry representatives.
Although domestic companies provide about 64% of the demand for tiles used in homes, office buildings, factories or any other installations, the proposed budget for the next fiscal year did not repeal or reduce the 15% supplementary duty on the production and supply of domestic tiles, they added.
However, the tariff on imported tiles has been reduced to $1 per square metre, so the price of imported tiles can be reduced up to Tk10 per square foot, they further said.
Entrepreneurs in the tiles sector said that the steps taken in the proposed budget will increase the scope of the business of foreign tiles in the country but the domestic companies will be affected.
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Shirajul Islam Mollah, president of Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA), said that the proposed budget has given protection to a large number of local industries.
“But the manufacturers of the ceramics sector did not get any protection. The tariff on imported tiles has been reduced without withdrawing the supplementary duty at the production and supply stage. This will increase imports and the suffering of local entrepreneurs,” he added.
Farid Ahmed, general manager of Mir Ceramics Limited, said that it is disappointing that 15% supplementary duty (SD) has not been withdrawn or reduced in the proposed budget.
“If we produce a product worth Tk100, then we have to pay Tk15 supplementary duty and then again Tk15 VAT on it. In this case, the withdrawal of tariffs on imported tiles without reducing or withdrawing SD or VAT will hinder local tiles entrepreneurs,” he added.
He also said that once tiles were a fancy or luxury item but now it is one of the main elements of building houses, factories or any installations.
The use of tiles is now increasing to reduce environmental pollution and build sustainable installations, he said, adding that the withdrawal of SD on tiles in the supply stage is urgent.
According to BCMEA, there are currently 30 companies producing tiles in the country and their investment is worth more than Tk5,000 crore.
These companies have the capacity to produce 206.5 million square metres of tiles per annum.
The total market size of tiles is worth Tk4,500 crore where domestic companies have shares worth Tk3,855 crore while foreign companies hold about Tk741 crore.
The BCMEA had demanded the withdrawal of 15% SD on domestic tiles production and supply and an increase in the minimum tariff price on imports of foreign tiles, but that demand was not met in the budget.
Conversely, authorities imposed 15% VAT on the commission which dealers and distributors of domestic tiles and sanitary products received from their respective manufacturers, said a spokesperson of BCMEA.
The BCMEA also demanded repeal of import duty on some essential raw materials used in the ceramic industry and regulatory and supplementary duty imposed in some cases — which also went ignored.
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However, the advance tax on import of raw materials and other materials has been reduced from 5% to 3% and corporate tax rates have also reduced, said the BCMEA official.
BCMEA also called for rationalizing the waste of raw materials in the production of ceramic products in the budget of FY22.
According to the organization, 80-90% of the raw materials used in the tiles sector are natural minerals. Those minerals contain a lot of water vapour, iron and water and that is why 30-40% system loss is incurred till final production.
However, all kinds of duty and tax have to be paid fully on imported goods.
Finance Minister AHM Mustafa Kamal presented the proposed national budget of Tk603,681 crore for the 2021-22 fiscal year in the parliament on June 3.
