Business Report:
The proposed increase in customs duty on infant nutrition products under the new national budget has triggered alarm among child health advocates, industrial players, and women’s rights groups. The government has raised customs duty on bulk imports of infant milk preparations from 5 per cent to 15 per cent, which stakeholders say could jeopardize the health and nutrition of thousands of babies, especially those reliant on formula milk due to the inability to breastfeed.
The change came through Customs SRO No. 192-Ain/2025/14/Customs, dated May 29, 2025, replacing the earlier SRO No. 164-Ain/2024/16/Customs. The revised duty specifically affects items under HS Code 1901.90.30-classified as “preparations for infants and children in bulk imported by Industrial IRC Holders and VAT Compliant Food Processing Industries.”
Industry insiders, including Nestlé Bangladesh PLC (NBL), a subsidiary of Switzerland-based Nestlé S.A., have voiced serious concerns over the potential consequences of the hike. NBL, which has been operating in Bangladesh since 1994, established a state-of-the-art filling facility in Gazipur in 2021 to locally produce infant nutrition products. The company has stated that this new duty structure could increase operational costs by BDT 400 million annually and lead to a 20 per cent drop in turnover, potentially reducing government revenue by BDT 250 million.
Although breastfeeding remains crucial for infant health, approximately 40 per cent of children in Bangladesh rely on formula due to various constraints, including health issues and lack of maternity support for working mothers. Experts warn that the increased retail price of infant milk-an inevitable outcome of the customs duty hike-could push low-income families toward unsafe alternatives such as cow’s milk or unregulated powder products, raising the risk of malnutrition and infant mortality.
“Increased prices may force families to compromise with unsuitable milk substitutes, leading to poor growth, malnutrition, and even deaths,” a source close to the matter said.
The hike also threatens the livelihoods of working mothers, particularly in the garments sector, who depend on infant formula to remain employed. “Infant milk is not just food-it is an enabler of women’s participation in the workforce,” said an industry representative.
The customs duty increase also contradicts the national goal of encouraging industrial processing and foreign direct investment. Nestlé Bangladesh currently employs around 960 people directly and supports 18,000 jobs indirectly. The company contributed BDT 804 crore in taxes in 2024 and has been recognised as the highest taxpayer in the food and allied sector for seven consecutive years.
“If local production becomes unviable due to high import duties on raw materials, companies may switch to importing finished goods instead,” said an official from the food processing sector. “This shift will likely lead to job losses, reduced investment, and missed opportunities for industrial development.” NBL’s factory in Gazipur is one of just 34 Nestlé facilities globally equipped with sophisticated infant formula technology. The company warns that the recent policy change may disincentivize both current and future investments in the country.
Ironically, the customs duty increase appears to contradict the government’s own statements in the 2025-2026 national budget speech. Under the theme “Building an Equitable and Sustainable Economic System,” the government emphasized the need to reduce tariffs on essential goods and industrial raw materials (referencing clauses 116(o), 121, and 124 of the speech).
“This increase does not align with the Hon’ble Adviser’s declared objective of supporting essential commodities and local industries,” the report added.
There is also confusion regarding the exact scope of the duty hike under HS Code 1901.90.30, which includes both malt extract and infant food preparations. Industry representatives have requested clarification, pointing out that malt extract and infant milk are entirely different products and should not be subject to the same tariff treatment.
