High duties on solar parts slow green transition

The government should reduce import duties on solar equipment in the upcoming budget for fiscal year 2026-27 to encourage wider adoption of renewable energy and help exporters meet international compliance requirements, said Vidiya Amrit Khan, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

In an interview with The Daily Star, she said high import duties discourage garment exporters from installing renewable energy systems at factories. While a few large garment and textile factories can afford solar installations, small and medium-sized enterprises continue to lag behind.

The European Union (EU) -- the largest destination for Bangladesh’s garment exports -- has adopted regulations that could restrict market access or reduce the competitiveness of products manufactured using fossil fuel-intensive processes by 2035.

Import duties on solar panels currently range from 37 to 58 percent, creating a major obstacle to investment. Duties on solar batteries are also excessively high and should be reduced. BGMEA has been promoting renewable energy adoption through various awareness programmes

The Corporate Sustainability Due Diligence Directive aims to significantly reduce fossil fuel use across global supply chains and advance Environmental, Social and Governance goals.

The EU accounts for more than 60 percent, or around $25 billion, of Bangladesh’s annual garment exports. Bangladesh is currently the largest garment exporter to the EU by volume, having overtaken China in the market two years ago.

To maintain export growth in the EU market, Bangladesh must accelerate its transition from fossil fuels to renewable energy, Vidiya said.

However, adoption remains slow. Less than 5 percent of the power used in the garment sector currently comes from renewable sources.

For years, Bangladeshi exporters have faced growing pressure from international, particularly EU-based, retailers and brands to shift towards clean energy.

Vidiya said import duties on solar panels currently range from 37 percent to 58 percent, creating a major obstacle to investment. Duties on solar batteries are also excessively high and should be reduced, she added.

She said BGMEA has been promoting renewable energy adoption through various awareness programmes across the country.

According to Vidiya, Bangladesh’s competitors in the garment sector -- including India, Pakistan, Vietnam, China and Turkey -- have already made significant progress in renewable energy adoption, while Bangladesh continues to lag behind.

She also called for measures to improve the ease of doing business, including the introduction of single-digit lending rates to lower business costs and improve competitiveness.

As many garment factories have recently been operating below capacity because of inadequate gas and electricity supply, she urged the government to ensure an uninterrupted energy supply to industries.

Vidiya also drew attention to the extortion and harassment businesses face while seeking services from various authorities, saying such practices continue to undermine the country’s business environment.