Solar power equipment imports granted duty-free benefits, electricity costs set to fall

The government is placing renewed emphasis on electricity generation from renewable energy, a priority reflected in the proposed budget for the 2026–27 fiscal year.

It has withdrawn import duty, regulatory duty, supplementary duty and advance tax on the import of key equipment used in the solar power sector.

As a result, the cost of generating solar electricity could fall by 25 to 30 per cent.

Finance Minister Amir Khasru Mahmud Chowdhury made the announcement during his budget speech in Parliament today, Thursday.

He said, “To promote the solar power sector, the most important and safest source of renewable and sustainable energy, I propose issuing a new notification setting the applicable import duty, regulatory duty, supplementary duty and advance tax on the import of key equipment used in this sector at zero per cent.”

Stakeholders say the duty exemptions will provide relief ranging from 30 to 70 per cent for the solar power sector. They believe the move will generate a positive response from investors in renewable energy and usher in a new phase in the country's energy security.

At least 60 jobs are created for every megawatt of electricity generated from renewable sources, and the sector is now expected to see substantial employment growth. The measure could also help Bangladesh achieve its target of generating 10,000 megawatts of electricity from renewable energy within the next five years.

Welcoming the government's policy decision, Bangladesh Sustainable and Renewable Energy Association president Mostafa Mahmud said it demonstrated the government's commitment to the renewable energy sector.

He told Prothom Alo that there is currently no viable alternative to renewable energy for sustainable development. “Industries will now be able to generate electricity, and many households will also become interested,” he said.

The budget proposes that the duty and tax exemptions for the solar power sector remain in force until June 2031, citing the need for sustained and long-term development of the industry.

However, the finance minister proposed ending the incentives for products such as mounting structures, lithium cells, battery packs and battery energy storage systems after 30 June 2028. The withdrawal is intended to encourage domestic production of these products and support the growth of local industry.

The budget speech also proposes issuing a new notification granting incentives to environmentally friendly battery manufacturing industries.

The government said it wants to encourage the production of eco-friendly sodium-ion batteries and lithium-ion battery packs, alongside lithium-ion batteries, within the country.

To that end, it has proposed duty and tax exemptions on the import of materials required for manufacturing such products. The incentives are proposed to remain in place until 30 June 2030.

Khandaker Golam Moazzem, research director at the private think tank the Centre for Policy Dialogue (CPD), told Prothom Alo that the government had moved away from its long-standing tendency to favour fossil fuels.

He said the removal of duties would be reassuring for investors and financiers.

However, he argued that the incentives for some products should remain in place until domestic industries are firmly established, rather than being withdrawn after two years. “Removing them after two years could discourage investment. They could reasonably be retained for up to five years,” he said.