Bangladesh Unveils Sweeping EV Incentives to Combat Emissions and Air Pollution

The Bangladeshi government has announced a comprehensive set of incentives in its latest national budget to accelerate the transition from fossil-fuel-powered transport to electric vehicles (EVs). Finance Minister Amir Khosru Mahmud Chowdhury unveiled measures including zero tariffs on electric bus and truck imports and the complete removal of taxes on charging station infrastructure. These initiatives aim to meet the country's Nationally Determined Contribution targets of replacing 25% of buses and 30% of trucks with electric alternatives by 2030 while addressing severe public health issues caused by air pollution.

During the national budget announcement on June 11, Finance Minister Amir Khosru Mahmud Chowdhury proposed a coordinated tariff structure designed to modernize Bangladesh’s transport system and reduce its 9% contribution to greenhouse gas emissions. Key measures include a full exemption, excluding value-added tax, on the import of electric buses and trucks from July 1, 2026, through June 2030. To support the necessary infrastructure, the government is slashing the total tax incidence on EV chargers and charging stations from 39.75% to 0%. Additionally, the government is targeting the solar sector with a 0% tax rate until 2035 and a 5% rebate on solar electricity bills to ensure the energy transition is supported by renewable sources.

The new fiscal policy also addresses private transport by reducing registration fees and taxes for electric private cars to make them more affordable for citizens. For plug-in hybrid vehicles with engine capacities up to 1,800 cubic centimeters, the government is fully withdrawing regulatory duties and reducing supplementary duties. Conversely, the budget significantly increases the financial burden on fossil-fuel-run vehicles to discourage their use; for instance, the tariff on vehicles with engine capacities between 1,200 cc and 1,600 cc will rise from 132% to nearly 156%. These measures are intended to mitigate air pollution, which UN estimates suggest contributes to more than 235,000 deaths annually in Bangladesh.

While the move has been described as laudable by experts like Provat Saha, formerly of the Bangladesh University of Engineering and Technology, industry leaders have raised concerns regarding implementation. Saiful Islam of the Bangladesh Bus-Truck Owners Association noted that electric buses and trucks currently cost three times more than diesel alternatives and have a projected economic life of only 10 years. Islam emphasized that the transition requires significant investment in skilled manpower, spare parts, and technological knowledge, noting that current charging times of 30 minutes compared to five-minute refueling for diesel could face passenger resistance. Furthermore, Saha expressed skepticism regarding whether these measures would adequately address pollution from the largest trucks and lorries, which are not yet widely available in electric versions.