STAR BUSINESS REPORT

Steel manufacturers yesterday urged the government to withdraw proposed increases in VAT and duties in the FY2026-27 national budget, warning that the measures could raise costs by up to Tk 12,000 per tonne, as most mills are operating at less than half capacity.

At a press conference at the National Press Club, Mohammed Jahangir Alam, president of the Bangladesh Steel Manufacturers Association (BSMA), said the industry is already under pressure from rising electricity tariffs, port charges, river dues, transport costs and other operating expenses.

He said electricity price increases alone have pushed production costs up by Tk 1,800 to Tk 2,000 per tonne, while higher logistics and other costs have added another Tk 3,000 to Tk 3,500 per tonne.

Alam added that the proposed budget measures -- including higher value-added tax (VAT) at the sales stage, increased VAT on locally sourced scrap, and additional duties on ferro-alloys, refractory materials and spare parts -- would raise costs by a further Tk 2,000 to Tk 2,500 per tonne.

“As a result, direct production costs could rise by Tk 5,000 to Tk 6,000 per tonne,” Alam said.