Grey Market Costs Bangladesh Tk6,000 Crore in Annual Taxes, Say Industry Leaders

The widespread "grey market" for smartphones is costing Bangladesh an estimated Tk5,000 to Tk6,000 crore in annual tax revenue. Industry representatives are now urging the government to immediately enforce the National Equipment Identity Register (NEIR) to block the sale of illegal handsets.

Ziauddin Chowdhury, Country Manager of Xiaomi Bangladesh, spoke at a press conference on Tuesday titled "Towards a Safer Bangladesh through NEIR." Chowdhury, also an executive member of the Mobile Phone Industry Owners’ Association of Bangladesh (MIOB), argued that strict NEIR implementation is essential to protect local manufacturers and consumers.

According to Chowdhury, approximately 20% of smartphones entering Bangladesh are illegal or sold through informal channels. Total Informal Turnover nearly Tk10,000 crore remains outside the formal economy. Market Stagnation of official sales for premium phones (priced above Tk30,000) have stalled because legal vendors cannot compete with grey market imports that evade the 43% tax bracket.

"We have the capacity and the workforce, but we cannot compete with products that bypass taxes," Chowdhury said. He predicted that once NEIR is enforced, production scales will rise, eventually making official handsets more affordable.

Addressing recent protests by some mobile traders, the MIOB dismissed claims that NEIR would threaten 20,000 shops and two million families.

Research from Insight Metrics Ltd indicates there are roughly 13,000 smartphone retail points in the country. Of these, 90% already sell official products. Only about 1,000 to 1,500 shops deal exclusively in used or unofficial devices. "Claims of mass unemployment are fabricated to gain public sympathy," Chowdhury asserted.

While supporting the government’s revenue goals, the association also called for a tax review in the upcoming budget. They argue that smartphones should not be taxed as "luxury items."

"Smartphones generate recurring revenue through digital banking, data usage, and mobile financial services," Chowdhury explained. "Lowering prices will accelerate the country’s digital transformation."

MIOB President Jakaria Shahid also corrected the misconception that local factories only assemble parts. He noted that members have moved into advanced manufacturing, including Surface Mount Technology (SMT), achieving a value addition of 15% to 20%—a level comparable to neighboring countries.