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Light engineering set to make progress

Published : Tuesday, 8 June, 2021 at 12:00 AM  Count : 579

Light engineering set to make progress

Light engineering set to make progress

It is proposed in the budget FY 21-22 that light engineering product manufacturers will enjoy a 10-year tax holiday. People linked to light engineering have lauded this government initiative and at the same time, they have urged to adopt effective measures to address the remaining challenges. It is well acknowledged that this sector has full potential to boom. Thus to help this progressive sector the manufacturers emphasized on technological skill development and address related difficulties.

Currently, the country spends billions of dollars importing capital machinery, parts, various light engineering products or components. If local light engineering industry is equipped with technological advancement, the announced fiscal measures have the potential to help the light engineering sector grow significantly. However, the path is not smooth as many problems to be solved in order to reach the goal.

Unquestionably, the tax holiday and clear VAT waiver are significant steps towards taking the light engineering sector way ahead. Experts opine that this sector has unlimited potential and can surpass the country's readymade garments industry. The tax holiday will attract investments in the local manufacturing of components of engineering industries such as automobiles and two wheelers, capital machinery, agro machinery, electrical and electronic products--which are considered thrush sectors. In addition, joint ventures with foreign partners will help technology transfer.

However, VAT waiver has come only for the light engineering manufacturers while repairing services are still subject to 15 per cent VAT. The biggest concern for the entrepreneurs seems to remain their uneven competition with low-cost imports. Capital machinery is subject to nearly zero taxes and duties at imports. Usually, a local light engineer manufactures have to spend much higher on a same machinery. It is because necessary metallic raw materials used in light engineering facilities are still subject to around 40 per cent taxes and duties.

Hence, it is now imperative to reduce tax on raw materials in order to sustain and flourish the local light engineering sector; otherwise it cannot compete with importer at the local market. We need change in policy making level so that the full potential of the sector can be utilized.

The government and the industry's common goal for a vibrant Bangladeshi light engineering industry will also face hurdles unless the government ensures cost-effective solutions in terms of land in the specialised hubs, technology upgradation, process modernisation and further training for the experts. Since the Corona pandemic has wrecked financial setbacks to the light engineering sector, the sector should avail a special stimulus also. We hope that this current plan will be implemented soon.






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