The FY2026–27 budget was reported as the moment Bangladesh abolished solar import duties. The Statutory Regulatory Orders issued afterwards tell a narrower story — and the difference determines whether your project captures the benefit or watches it go past.
An analysis of what was granted, who actually qualifies, what the industry asked for and did not get, what the government appears to be optimising for, and how a factory should structure a project to sit on the right side of the line.
Most coverage of the budget carried some version of the same headline: solar equipment duties cut to zero, tax holiday to 2035, five-year window. All of that is accurate. It is also incomplete in a way that matters commercially.
Within days of the budget, the National Board of Revenue issued the SROs that give the measures legal effect. The Bangladesh Sustainable and Renewable Energy Association read them and called a press conference to say the benefits were reaching far fewer parties than the announcement implied. That gap between headline and instrument is the subject of this article.
What the budget granted
Taking the measures at face value first, because they are genuinely significant.
| Measure | Position | Stated validity |
|---|---|---|
| Import duty, regulatory duty, supplementary duty and advance tax on key solar equipment | Zero | 30 June 2031 |
| Income tax on solar power generation | Fully exempt | 2035 |
| Tax rebate for solar electricity users | 5% | Per budget provision |
| Customs duty on lithium-ion batteries | 25% → 5% | See sunset note |
| Supplementary duty on energy storage systems | Removed (was 20%) | See sunset note |
| Relief on mounting structures, lithium cells, battery packs, BESS | Proposed to end | 30 June 2028 |
Before this, the combined tax incidence on panels, inverters, lithium-ion battery packs, battery housing and mounting structures ran to roughly 58.6%. Panels alone carried around 27%, inverters about 29%, and PV-DG controllers close to 89%. Removing that is not a gesture.
The five-year validity is the deliberate part. A one-year exemption changes nothing for an asset with a twenty-year life; a window to 2031 gives developers and lenders something to underwrite against.
The SRO problem: who actually qualifies
BSREA's analysis of the post-budget SROs concluded that the incentives apply, in practice, to a limited set of entities — principally certain solar power generation companies and providers — rather than to the sector as a whole. On that reading, households, farmers, small commercial users and a large number of solar-sector firms fall outside the scope entirely.
The association's position is that importers, EPC contractors and distributors should receive the same zero-duty, zero-tax treatment. Its argument is quantified: extend the SRO to all stakeholders, it says, and Bangladesh could reach 6,000–8,000 MWp of solar capacity by 2030 using only about a quarter of the available rooftop space in Dhaka and the divisional cities.
Why this matters more than the headline rate. A duty exemption attached to the generation licence behaves very differently from one attached to the equipment. In the first case, the party importing and owning the plant captures the benefit. In the second, anyone buying the equipment does. The SROs, as read by the industry association, sit closer to the first.
One important caveat before drawing conclusions: SRO interpretation is a technical exercise, notifications get amended, and a trade association making a case in public is making a case. Nothing below should substitute for reading the applicable SRO with a customs agent against your specific import.
What each party actually gets
Factory owners buying a system outright
The equipment your contractor imports should land cheaper. How much of that reaches your invoice depends on whether the importing entity qualifies under the SRO and on the commercial terms you agreed. If your quotation predates mid-2026, it was priced with duties in it — the number is now wrong, possibly by a wide margin.
The separate 5% rebate on solar electricity applies at consumption. Worth confirming how it is claimed in practice, because a rebate mechanism is only as useful as its administration.
EPC contractors
The most exposed position, if BSREA's reading holds. An EPC firm importing equipment to build a system that the client will own is not itself a generation company. It may therefore sit outside the exemption while competing against structures that sit inside it. That is precisely the distortion the association is asking NBR to remove.
ESCO, RESCO and OpEx developers
The clearest beneficiaries. Under an OpEx or BOO structure the developer finances, owns and operates the plant and sells the electricity — which places it on the generation side of the line, where both the duty relief and the income tax exemption to 2035 apply. Industry commentary at the time noted that these businesses had long been excluded from benefits available to independent power producers, and that this measure begins to correct that.
Importers, traders and distributors
Left out, on BSREA's reading. A trader importing panels for onward sale is not generating anything, and appears to remain outside the exemption. There is also a long-standing procedural problem the association has raised repeatedly: solar products are assessed on weight rather than invoice value, which inflates assessed cost regardless of headline duty rates. A zero rate on an inflated base is worth less than it sounds.
Factories that need storage
Storage is where the timing is tightest. BKMEA raised battery import restrictions and customs complications in pre-budget consultations, noting that as load-shedding forced factories to run solar as production backup rather than a grid-connected supplement, storage stopped being optional. Duty relief on batteries and BESS helps — but is proposed to end on 30 June 2028, while solar equipment relief runs to 2031.
What BSREA asked for, and what it did not get
| Asked for | Outcome |
|---|---|
| Zero duty and tax for all importers, EPC firms and distributors | Not granted — benefits read as restricted to generation-side entities |
| Equal treatment for all equipment, including DC cables, connectors and smart meters | Partial — core equipment covered, balance-of-system items less clearly so |
| At least a 10-year tax holiday | Generation exemption to 2035 granted; duty window set at five years |
| Extension to residential and solar irrigation users | Not granted |
| Assessment on invoice value rather than weight | Not addressed |
| Long-term low-cost financing | Not addressed in the tax measures |
| Simplified net metering processes | Separate track — guidelines were revised in 2025 |
What the government appears to be optimising for
Read the measures as a set and a coherent intent emerges, whether or not one agrees with it.
Generation over trade. Concentrating relief on generation entities directs the subsidy toward installed megawatts rather than import volume. It is defensible on its own terms — and it disadvantages every firm whose business is supply rather than ownership.
Domestic manufacturing over permanent import relief. The 2028 sunset on mounting structures, lithium cells, battery packs and BESS is explicitly aimed at encouraging local production of those components. The bet is that two years of cheap imports builds the market, after which protection helps domestic manufacturers establish. Industry voices have argued two years is too short and that removing relief that early could deter investment rather than redirect it.
Energy security and foreign exchange. The consistent official framing is reduced dependence on imported fuel and relief on reserves. Against a target of 10,000 MW of solar by 2030 and roughly 1,174 MW currently under implementation, the gap is the argument for the incentive.
The contradiction nobody should skip
At a post-budget dialogue, CPD's analysis found that 98% of the energy sector allocation went to fossil fuels and 2% to renewables, and that eleven renewable energy projects received no allocation at all — three related to grid modernisation, seven to solar, one to battery storage.
That is the tension at the centre of this budget. Tax policy pushes hard toward distributed solar; spending policy funds the conventional system. Grid modernisation is what determines how much distributed generation the network can actually absorb, and the projects that would have addressed it were among those unfunded.
For an individual factory this is mostly background. For anyone modelling sector growth to 2030, it is the constraint that will bind before equipment cost does.
The policy-certainty question. The industry's caution is not abstract. The cancellation of letters of intent for 37 solar plants, after roughly $300 million had already been committed, is still cited as the reason investors discount Bangladeshi renewable policy announcements. A five-year window is only as good as the willingness to leave it alone for five years.
Which route captures the most benefit
Disclosure: Greenwell delivers projects under both CapEx and OpEx structures, so we have a commercial interest in this comparison. Read it accordingly, and verify the tax position independently before deciding.
If BSREA's reading of the SROs is correct, the structure of a project now affects its tax treatment more than it did before the budget. Three routes, and what each currently looks like:
Route 1 — Direct purchase through a trader or distributor
The route most exposed to the gap. If the importing party sits outside the exemption, duties remain in the delivered price and the headline reform never reaches you. Ask any supplier quoting you directly, and in writing, under what SRO the equipment is being imported and whether exemption is being claimed.
Route 2 — EPC contract where you own the asset
Ownership, depreciation and the full value of every unit generated stay with you, and payback shortens as equipment cost falls. The open question is whether your contractor's import structure qualifies. This is a question to settle before signing, not after commissioning: ask how the equipment is imported and how any duty benefit is reflected in the price.
Route 3 — OpEx, ESCO or BOO structure
The developer imports, owns and operates the plant and sells you the electricity. Because the owning entity is a generation entity, it sits on the side of the line where both duty relief and the income tax exemption to 2035 apply — and, in principle, that lower cost base should be reflected in the tariff offered. You carry no capital cost and no performance risk; you also do not own the asset.
The practical test, whichever route you take: ask for the tariff or price to be quoted against the current duty structure, and ask explicitly whether the exemption is being claimed on your equipment. A supplier who cannot answer that clearly is either not claiming it, or not passing it on.
What to watch over the next year
- SRO amendments. BSREA is lobbying to widen eligibility to importers, EPC firms and distributors. If that succeeds, the calculus above changes for everyone.
- The 2028 storage sunset. Whether it holds, moves, or is extended. Storage-dependent projects should plan on the current date.
- Assessment on weight versus invoice value. Unresolved, and it quietly erodes the value of any duty exemption.
- Grid and net metering capacity. Cheaper equipment does not raise the sanctioned-load ceiling on how much you may install.
What this does not change
Tax relief improves project economics. It does not alter the engineering constraints that decide whether a system can be built at all: roof load-bearing capacity and remaining building life, shading and usable area, sanctioned load and the net metering cap, and the approval timeline. Nor does it solve the capital question — a cheaper project is still a project someone has to fund, which is why zero-investment structures remain relevant in a lower-cost environment rather than less so.
Free site survey for industrial facilities
A no-obligation survey covering load profiling, roof assessment, generation modelling and a straight comparison of CapEx and OpEx routes — priced against the current duty structure rather than last year's.
Request a Site SurveyRelated reading: Solar PV & BESS · Procurement Models · Projects
Sources: FY2026–27 budget reporting and post-budget analysis from The Daily Star, The Business Standard, Prothom Alo, The Financial Express, Dhaka Tribune, Daily Sun and New Age; BSREA press conferences (April and June 2026); BKMEA pre-budget submission to NBR (April 2026); Centre for Policy Dialogue post-budget dialogue (June 2026). Duty rates, validity dates and SRO scope are as reported at the time of publication. Tax positions change through subsequent notifications and interpretations — confirm the current position with a customs agent or tax adviser before making procurement decisions. This article is analysis, not tax advice.