Published: 09:59 AM, 07 May 2026
Ready-Mix Concrete Industry facing vat and supply crisis
Despite rising demand driven by rapid urbanization and infrastructure development, Bangladesh's ready-mix concrete industry is facing challenges due to VAT pressure, raw material shortages, and unhealthy market competition. Industry insiders warn that without timely policy support, sustaining this promising sector may become increasingly difficult.
Globally, demand for ready-mix concrete continues to grow. The market, valued at $1 trillion in 2025, is projected to nearly double to about $2 trillion by 2033. Construction experts highlight that ready-mix concrete has become an essential component in modern construction due to its reduced wastage, superior quality, environmental benefits, and faster project execution.
While the United States and Europe currently dominate the sector, rapid expansion is taking place across the Asia-Pacific region. Countries such as Japan, Singapore, the United Arab Emirates, Germany, India, and China are witnessing significant growth in usage.
In Bangladesh, stakeholders note that the use of ready-mix concrete is increasing from urban centers to rural areas. It enhances construction speed, minimizes material waste, and ensures better quality control, making it increasingly indispensable for most projects. Since its commercial introduction in 1990, the industry has expanded rapidly, attracting substantial investment. However, in recent years, it has come under pressure due to a combination of domestic and global factors.
The situation became more complex after a 15% VAT was imposed on ready-mix products in 2022. At the same time, disruptions caused by the COVID-19 pandemic, the Russia-Ukraine war, and more recent geopolitical tensions, including the Iran-Israel conflict, have affected the supply of key raw materials. As a result, essential inputs such as stone and admixtures are increasingly difficult to source on time and at stable prices.
Additionally, VAT evasion has reportedly increased following the tax hike. Some non-compliance companies are accused of avoiding VAT at the production stage and selling at lower prices, leading to an estimated annual revenue loss of around BDT 100 crore for the government.
The direct impact is being felt by compliant companies. Although they pay taxes at every stage, tax-evading firms are able to offer products at lower prices, creating an uneven competitive environment. As a result, legitimate businesses are being undermined and the overall market balance is being disrupted.
A senior official from the National Board of Revenue (NBR), speaking on condition of anonymity, noted that limited manpower makes consistent field-level monitoring challenging. He suggested that increasing tax collection at the import stage could help reduce evasion by ensuring revenue is secured upfront.
Industry stakeholders emphasize that while the sector has become essential over the past decade due to the construction boom, current policy pressures and global uncertainties are making business operations increasingly difficult.
Sheikh Shabab Ahmed, Head of Corporate Affairs and Legal at Abul Khair Group, stated that since VAT is already applied to raw materials, the additional 15% VAT on the final product is creating excessive pressure on the market. He argued that exempting VAT at the production stage would ensure fair competition, reduce construction costs, and help sustain the industry.
He further added that increasing tax at the import stage could generate an additional BDT 100 crore in government revenue.
Experts suggest that adjusting taxes at the import stage could ensure early revenue collection while minimizing evasion during production and sales.
Stakeholders conclude that unchecked VAT evasion and policy inconsistencies pose significant risks to the ready-mix concrete industry. To ensure its sustainability, a balanced and realistic policy framework is needed-one that secures government revenue while maintaining fair competition in the market.
