Bangladesh’s FY2026–27 budget proposes a broad package of incentives to promote electric vehicles (EVs), battery production, and charging infrastructure, while making some fossil-fuel vehicles more expensive to import.

The measures signal one of the government’s strongest pushes yet toward cleaner transport and domestic EV manufacturing.

To encourage EV adoption, the government plans to remove all import-stage duties and taxes on EV chargers and charging stations. The total tax burden would fall from 39.75% to zero. The government says a nationwide charging network is essential for the growth of electric mobility.

At the same time, it proposes higher taxes on some fossil-fuel vehicles. The total tax on imported vehicles with 1,200cc to 1,600cc internal-combustion engines would rise from 132.36% to 155.88%. Tax rates on other vehicle categories would remain unchanged.

A key feature of the package is support for local EV production.

Companies that manufacture and assemble three- and four-wheel electric vehicles with significant local value addition would be allowed to import parts and components at an import duty rate of only 3%.

All other duties and taxes would be waived. The incentive applies to firms engaged in activities such as body building, welding, painting, and assembly.

Firms carrying out more limited assembly operations would receive a smaller benefit. They would pay a 15% import duty while remaining exempt from other taxes and duties. The structure is designed to reward greater local value addition.

The government is offering even stronger support for electric buses and trucks.

Manufacturers would be able to import components and raw materials free of duties and taxes, paying only an additional 5% VAT. These incentives would remain in force until 30 June 2031.

The budget also extends support to battery manufacturing. The government proposes duty and tax exemptions until 30 June 2030 on imported materials and components used to produce lithium-ion batteries, sodium-ion batteries, and battery packs.

Local suppliers producing parts and components for domestic electric-bike manufacturers would also receive duty concessions.

The government appears to be trying to build a complete EV ecosystem, covering charging infrastructure, vehicle assembly, battery production, and component manufacturing.

The EV initiatives come alongside several other climate and environmental commitments.

The government plans to plant 2.5 billion trees over the next five years and says the programme could create around 350,000 green jobs. It also aims to bring 50% of coastal mangrove forests under a carbon-trading programme and reduce plastic waste by 30% within five years.

The budget proposes Tk 100 crore for the Bangladesh Climate Change Trust in FY2026–27.

On climate adaptation, the government plans to restore 20,000 kilometres of rivers, canals, and other water bodies over the next five years. It also aims to construct, reconstruct, or repair 309 kilometres of embankments during the coming fiscal year.