Bangladesh’s interim government has announced sweeping tax incentives to accelerate the domestic production of electric vehicles (EVs) and components, including e-bikes and lithium and graphene batteries.

Unveiled as part of the FY26 national budget on 2 June by Finance Adviser Salehuddin Ahmed, the package includes five-year VAT exemptions and customs duty cuts of up to 60% on key components.

The National Board of Revenue (NBR) confirmed that VAT on e-bikes has been reduced to 5% until June 2030, while manufacturers of lithium and graphene batteries will enjoy full VAT exemption until mid-2027. From July 2028 to June 2030, VAT will be capped at 5%.

Additionally, import taxes on essential raw materials for battery production have been lowered to 1%, subject to compliance with local manufacturing conditions.

“The government has significantly reduced duties, but it is not for encouraging any form of assembling,” said Mokitul Hasan, NBR’s second secretary (Customs Policy). “Our focus is on true manufacturing.”

He stressed that battery cell production—a high-value segment—must occur locally. “Importing cells and assembling the rest isn’t true manufacturing,” he added.

The government has also exempted electric vehicles from the environmental surcharge typically levied on multiple vehicle ownership, as part of efforts to promote sustainable mobility.

Officials say the policy aims to reduce fossil fuel reliance, cut imports, and support green urban transport, positioning Bangladesh as a potential regional hub for e-vehicle manufacturing.