The government has launched a two-pronged attack on rising prices ahead of Ramadan, cutting taxes on essential commodities and importing them in bulk under special arrangements to blunt the pinching inflation.
The move intends to ensure affordability for people during the holy month when demand for key items such as rice, sugar, edible oil and pulses typically spikes.
The measures announced Thursday include tax cuts on both imports and local production of these essentials.
Besides, the Ministry of Commerce expects a positive signal for sugar and onion imports despite New Delhi having an export ban on those items.
On January 28, the Ministry of Commerce formally requested permission to import onion and sugar. The Indian regulatory body has conveyed positive signals to the Bangladesh High Commission in New Delhi regarding this request.
Referring to the Bangladesh High Commission in India, a senior official told The Financial Express that New Delhi was expected to announce its decisions about Bangladesh's sugar and onion imports within three days.
Tax cuts on essentials
Through four separate circulars, the revenue board announced tax cuts on rice, sugar, edible oil and dates.
Total tax incidence on rice import has been lowered to 15.25 per cent from earlier 62.50 per cent and customs duty on date imports to 43 per cent from earlier 58.60 per cent.
The import duty of sugar has been slashed by Tk 0.50 per kilogram by lowering its specific duty.
Import duty on edible oil has been slashed by 5.0 per cent, from 15 per cent to 10 per cent, and also exempted 15 per cent value-added tax (VAT) at the local stage.
According to an estimate by the National Board of Revenue (NBR), the government may lose nearly Tk 2.0 billion on account of the fresh tax cuts on sugar and dates.
For importing rice at cheaper prices, the NBR has lowered customs duty to 5.0 per cent from 25 per cent and exempted entire import taxes till May 15, 2024.
Boiled rice and non-boiled Atap rice (except aromatic rice) would enjoy the tax benefits on conditions. The conditions include a mandatory requirement of written approval from the Ministry of Food before importing each consignment.
Tax benefits for edible oil, such as refined and crude soya bean oil, crude palm oil and others including refined palm oil, would be valid till April 15, 2024.
Reduced tax facility on date imports, from 25 per cent to 15 per cent, will be valid till March 30, 2024.
Import taxes on raw and cane sugar have been cut to Tk 1,000 per tonne from Tk 1500 per tonne, valid till March 31, 2024.
The prime minister earlier instructed tax cuts on those four items followed by a commerce ministry request.
India assures Bangladesh of special imports
On January 24, State Minister for Commerce Ahasanul Islam Titu spoke with his Indian counterpart Piyush Goyal, seeking special permission to import 100,000 tonnes of sugar and 50,000 tonnes of onion.
According to communication obtained by The Financial Express, Mr Goyal reportedly assured Mr Titu of such permission.
Mr Titu also requested expedited action on the previously proposed annual import quota.
While India currently bans sugar and onion exports, it recently assured Bangladesh of permission to import 50,000 tonnes of sugar and 20,000 tonnes of onion.
Local market sources report that sugar is currently scarce, expensive and not being sold at government-fixed rates.
Sugar continues to retail at Tk 130-140 per kilogram, according to the daily market review by the Trading Corporation of Bangladesh (TCB). Demand for sugar surges to 300,000 tonnes during Ramadan, compared to the monthly average of 150,000 tonnes, data shows.
Similarly, the Ministry of Commerce reports annual onion demand exceeding 2.5 million tonnes.
This season, prices of onion varieties remain high even during the current harvesting season. Local onions sold for Tk 90-100 per kg on Thursday, while imported ones ranged from Tk 80-120 per kg.
"We have implemented initiatives to maintain stable prices throughout the year, particularly during the upcoming holy month of Ramadan," said a high-ranking commerce official.
He elaborated on government steps to stabilise prices of key essentials like sugar, edible oil, onion, dates, and gram during Ramadan.
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