The grey handset market in Bangladesh is booming, and it's a story of high taxes, currency fluctuations, and a thriving unofficial trade. A perfect storm has pushed consumers towards cheaper, grey-market phones, leaving official sales and local manufacturers struggling.
With import duties sky-high and the Bangladeshi taka taking a tumble, legal handsets have become prohibitively expensive. As a result, the grey market has stepped in to fill the gap, and it's now the go-to option for many consumers. But here's where it gets controversial: enforcement agencies rarely check malls for genuine products, effectively giving the grey market a green light.
So, just how prevalent is the sale of unauthorized handsets? Well, consider this: a government secretary, seeking to buy a flagship phone, was advised by a relative to avoid the official store. Instead, he was directed to a different retailer, where he snapped up the device for half the official price. And this is not an isolated incident. Estimates reveal that a staggering 93% of premium phones and around 69% of mid-range models in use last year came from the grey market.
Traders source these devices through returning travelers' luggage, and now, as the government prepares to introduce a centralized system to block new unofficial sets, protests are erupting. Small retailers argue that the documentation and processes required to sell official handsets are simply not feasible for them. On top of that, many consumers would struggle to afford the official prices, which can be up to 35% higher due to taxes.
Bangladesh now imposes some of the world's highest taxes on officially imported smartphones, with duties totaling between 57% and 59%. This has driven consumers towards the grey market, where handsets are significantly cheaper. Official retail prices are inflated by 30% to 50% compared to international benchmarks, making legal distributors uncompetitive and undermining the viability of official channels.
The issue was highlighted by Jungmin Jung, managing director of Samsung Electronics Bangladesh, at a Foreign Investors' Chamber of Commerce & Industry session last year. Samsung data showed that grey-market phones were 30% to 48% cheaper than official models, with a Model A handset costing almost half the official price through unofficial channels. Premium models were particularly affected, with an estimated 93% of units in Bangladesh coming from the grey market.
Currency volatility has also taken its toll on local production. Taxes on locally manufactured phones have increased, with Bangladesh's rate now at 35%, compared to around 20% in Pakistan. When local assembly began in 2017, raw materials faced a much lower 12% import duty, and there was no value-added tax (VAT) on manufacturing or sales. However, by 2022, multiple layers of VAT had been introduced, pushing total taxes to 35%.
The same year saw a significant devaluation of the taka, making it harder to open letters of credit, and grey handsets became even more attractive. As a result, handset production in 2023 fell for the first time since assembly began, dropping 26% year-on-year. In 2024, production rebounded, but weak sales and large grey imports continued to challenge manufacturers.
According to industry data, grey smartphones now account for 40% to 50% of the market, with unofficial devices capturing over $0.7 billion of a $1.7 billion market. The grey market alone is estimated to be worth around $0.8 billion in 2025.
Traders are resisting the government's attempts to regulate the market, with protests against the NEIR system. They argue that devices are sourced legitimately from foreign travelers, bypassing official procedures. NEIR and high taxes, they claim, disproportionately affect small traders while benefiting local assemblers. The BTRC Chairman has stated that the commission is working to simplify import and vendor-enlistment processes, but the debate rages on.
So, what's your take on this? Do you think the government should focus on regulating the grey market, or is there a better way to support local manufacturers and official sales? Let us know your thoughts in the comments!
