Bangladesh government is considering reducing customs duty on seven imported tanning chemicals in the upcoming national budget, offering slight relief to the country’s struggling tannery sector.
At present, only 27 tanners benefit from bond facilities designed to support the domestic leather industry. Around 100 others operate without such privileges and face higher and varied duties on chemical imports, according to finance ministry sources.
Industry leaders say this disparity creates an uneven playing field. The Bangladesh Tanners Association (BTA) has told the National Board of Revenue that the existing duty structure is hurting the competitiveness of the sector. There are also reports that some traders are exploiting the bond system by importing chemicals duty-free and then selling them on the open market — an abuse made more profitable by the high duties faced by non-bonded tanners.
In response, the government is now weighing a reduction in customs duty on seven key chemicals used in tanning, including chromium sulphate, acid dyes, and wattle extract. Under the proposal, duties on six of these items may be cut from 5% to 1%, while the duty on sulphate could drop from 10% to 5%. However, the NBR may also impose a 15% value added tax (VAT) on sulphate.
On the other hand, “The current import tax structure, ranging from 35% to nearly 40% on essential chemicals, is simply unsustainable,” said Shaheen Ahmed, chairman of the BTA.
“Chemical imports are the lifeline of the tannery sector. Except for basic inputs like salt and lime, we rely entirely on imported chemicals. Competing with countries that enjoy cheaper raw materials becomes nearly impossible under these tax conditions,” said Ahmed. He claimed that minor reductions in duty will not solve the bigger problem. “Even if duties are cut by a few percentage points, it doesn’t resolve the bigger issues,” he said.
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