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Duty impose on solar to hinder going green

Bangladesh has caught global attention with its fastest-growing economy with the greatest number of LEED Certified Green factories, fulfilling the UN’s SDG goals. And more importantly, aiming to achieve generating 40% of its electricity from renewables by 2041.

Figure 1: The re-imposition of duty on solar panels danger Bangladesh’s sustainable development goals.

This energy transformation is critical for the country – as Bangladesh is currently leading the 48-nation Climate Vulnerable Forum group of countries extremely affected by global warming.

As per the latest data from the Sustainable and Renewable Energy Development Authority (SREDA), 786.85 MW of electricity is generated from renewable energy sources. Out of 786.85 MW, 545.8 MW of electricity comes from solar followed by 2.9 MW from wind, 230 MW from hydro, 0.69 MW from biogas, and 0.4 MW from biomass.

Figure 2: Faruque Hassan stressed 1% duty impose will hamper textile & apparel industry’s sourcing green energy initiative.

In a country of land insufficiency, the development of rooftop solar is seen as the ultimate solution. The Power Division is now emphasizing rooftop solar projects to utilize the rooftops of industries to develop solar power plants. SREDA and IDCOL have taken some initiatives to inspire the industry owner to install the rooftop solar power plant. Now, a decent number of rooftop solar power plants are implemented and are expected to increase in the coming days.

Against this backdrop, recently the finance minister in his proposed budget for FY23 has imposed a 1% import duty on solar panels. Along with the proposed re-imposition of higher import duty and taxes on inverters. As a result, the tax and duty rate levied on imported inverters leapt 26%.

The re-imposition of duty danger Bangladesh’s sustainable development goals and the greenhouse gas reductions the country has committed to under the Paris climate agreement.

Abdullah Mohammad Talha-Noman Group
Figure 3: Abdullah Mohammad Talha expressed that cost for funding for renewable energy is extremely high.

The industry leaders have opined that the restoration of full duties had come as a setback, especially with the COVID-19 impact and the Ukraine-Russia war continuing to affect the sector. Globally the price of energy has gone up significantly, especially for rooftop solar, and other small initiatives will face difficulties. The tax liability is another obstacle for Bangladesh’s clean power developers.

Faruque Hassan, President, BGMEA said, “The 1% duty imposed will greatly hamper Bangladesh textile and apparel industry’s sourcing green energy initiative. I urge the government to remove this.”

Abdullah Mohammad Talha, Managing Director, Noman Group of Industries & Talha Group expressed that “The cost for funding for renewable energy is extremely high; the government should give tax cuts and zero-interest loans to the industries that have a concrete, audited, and approved plan. The initiative must ensure a steady build-up of alternative energy sources, notably renewable in Bangladesh. We are already out of our biofuel.”

Figure 4: Ezaz Al Qudrat A Mazid said the leading fashion brands sourcing from Bangladesh have been pushing T&A factories to source green energy. 

“Government can make a special team to help industries prepare for the transformation. They have made a program for safety to replace the accord and alliance RCC, so they can do one for saving the environment and future energy crises.”

Sector people are demanding that inverters projected for use in clean energy systems could have their own product code under the ‘harmonized system’ used to classify items globally, thus making it easier for governments to incentivize their use.

Renewable energy expert Ezaz Al Qudrat A Mazid, Managing Director, Solar EPC Development Ltd. said, “The leading fashion brands sourcing from Bangladesh have been pushing the textile and apparel factories to source green energy. And the readymade garment (RMG) industry has been moving up with solar power especially after the pandemic troubled times. And leading textile and apparel trade bodies have been expecting that the govt. will continue the duty-free benefit on solar modules and other items for the RMG industry. Whereas, the govt. has imposed 1% duty on solar modules and re-imposed higher import duty and taxes on inverters.”

“On top of it, energy prices have been sharply shot up globally and in Bangladesh. Gas electricity and petroleum prices have increased manifold. Similarly, in many parts of Bangladesh – a continuous supply of energy is still a far cry. In this scenario, the govt. should at least make it duty-free for the textile and apparel sector. Then it will greatly aid the industry.”

“We, Solar EPC Development Ltd., are one of the foremost and fastest-growing solar power project developers and consultancy firms in Bangladesh and associated with renowned and reputed international Solar Project Developers, EPC Contractors and Investors to expedite the green & clean energy in the textile & apparel and other industries. We offer cost-effective solutions without compromising the quality to fulfill customers’ energy needs along with solar project operations and maintenance” Ezaz added.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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