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When Desh Garments began making clothes for export at the end of the 1970s, Bangladesh lacked the technology, trained workers and raw materials the industry needed. Desh sent its first recruits to train at Daewoo’s factory in Pusan, South Korea, and the early factories relied on yarn, fabric and accessories imported duty-free under a special bonded system. Most factories initially performed only cut, make and trim (CMT) work, turning imported fabric into finished garments. This left Bangladesh with only a small share of the value generated along the supply chain.
Over time, entrepreneurs moved beyond sewing into spinning, weaving, dyeing, finishing and accessories. Today, local mills supply and process a substantial share of the raw materials used in knitwear, while the woven sector has also made considerable progress in developing domestic supply chains.
Bangladesh’s solar industry is now at a similar early assembly stage. In June 2025, a 40-foot container left the country carrying the first Bangladeshi solar panels sold to a US buyer. Radiant Alliance, an East Coast Group company, had assembled them in Ashulia using cells made in Laos and Indonesia. The buyer, CleanGrid, had ordered 64.6 megawatts (MW) over four years. That amounts to about 16 MW a year, less than 3 percent of the factory’s rated annual capacity of 600 MW.
“What we call manufacturing in Bangladesh is actually assembly,” says Syed Ishtiaque Ahmed, director of engineering and innovation at SOLshare. Solar cells, which convert sunlight into electricity, are the core components of a panel, but building factories to produce them requires billions of dollars, he says.
The two industries also differ in one important respect. Garment factories produced for international markets far larger than Bangladesh’s own from the outset, whereas solar assemblers still rely mainly on domestic demand, with exports offering a potential avenue for future growth. A local supply chain like that of the garment industry is possible in the solar sector too, but how far production can grow will depend on the size of the domestic market and the strength of demand.
Demand is rising, but how ready is local production?
Bangladesh’s energy crisis, its reliance on imported energy and the requirements imposed by international buyers on export-oriented factories are creating new demand for solar power, with factory rooftops offering particularly significant potential for expansion. Government records show 433 megawatts-peak (MWp) of rooftop solar capacity installed by September 2026, mostly through net-metered systems. The Institute for Energy Economics and Financial Analysis (IEEFA), which also counts systems missing from those records, estimated installed rooftop capacity at close to 1,000 MW in August.
Developers expect to add about 500 MW of rooftop solar capacity in 2026, while the government’s target is to install an additional 4 gigawatts (GW) of rooftop capacity by February 2027. Meeting that target would require large volumes of panels, inverters, lithium-ion batteries and other equipment, most of which Bangladesh currently imports.
With that demand in view, at least eight business groups are now investing in the production of inverters, lithium-ion batteries and other components. Bangladesh’s first attempt at solar manufacturing, focused on panels, showed how difficult it is to build a sustainable business through investment in factories alone when production capacity outpaces demand.
By 2016, investors had put Tk 200 crore into plants capable of assembling 80 to 100 MW of panels a year, but actual output reached only about 10 MW annually. Munawar Misbah Moin, managing director of Rahimafrooz Renewable Energy and president of the Solar Module Manufacturers Association of Bangladesh, says those plants were built to serve state-backed off-grid programmes, such as solar home systems and solar irrigation. Demand for small panels fell sharply as those programmes began winding down in 2015 and the government shifted its focus towards grid-connected solar power.
As demand declined, locally assembled panels were also becoming less competitive on price. Locally assembled panels sold for Tk 55 to 60 per watt in 2016, compared with Tk 40 to 42 per watt for imported ones. Shahriar Ahmed Chowdhury, director of the Centre for Energy Research at United International University, says the local plants’ production volumes were too small to bring costs down to levels competitive with imported panels. Several plants halted or reduced production as a result.
New investors are concentrating on other parts of a solar power system. One reason is that panels, which account for the largest single share of a solar system’s cost, face fierce international competition. According to an estimate by RANCON Solar, a 1 MW rooftop system costs Tk 3.5 to 4.5 crore. Panels account for about 55 percent of that cost and inverters about 20 percent, while mounting structures, cables, earthing and installation account for the remainder.
The limits of assembly
Bangladesh’s biggest constraint in solar panel production is that local factories handle only the final stage of the supply chain. Each earlier stage, from polysilicon production through ingots and wafers to cells, involves significant technological and capital barriers, and China accounts for more than 80 percent of global production capacity at every stage.
Along with cells, Chowdhury says, local assemblers import ribbons, busbars, aluminium frames, connector cables and low-iron glass, none of which Bangladesh produces domestically. The assembly process involves laminating cells behind glass, fitting frames and testing the finished panels.
MM Ahsan Huda, LONGi’s senior sales manager for Central and Southeast Asia, describes local solar panel assembly as “a totally wrong investment”. His main concern is the scale of production required to make such investments viable. “If internal market demand does not grow, it will never be possible,” he says.
LONGi’s own recent investment illustrates the scale involved. The plant it announced in Indonesia in 2025 has a rated annual capacity of 1.6 GW. At full capacity, its annual module output would be comparable, in nameplate capacity terms, to the entire solar capacity Bangladesh has installed to date.
Moin, however, does not rule out local assembly altogether. Asked whether locally assembled panels can be cheaper than imported ones, he says: “Smaller ones, yes.” China’s leading manufacturers, he explains, are increasingly concentrating on large panels for grid-connected systems. Radiant’s American order was for 100- and 200-watt panels. In Bangladesh, demand for small panels declined as off-grid programmes were gradually scaled back, while rooftop projects generally use larger panels. However, demand for smaller panels is emerging in certain overseas markets. Bangladeshi producers may therefore find opportunities in specific product niches rather than competing directly with China in the market for large panels. Radiant’s first export order, however, does not yet establish that a sustainable export market exists at scale.
Import taxes also influence whether local assembly can compete with imported products. In 2025–26, total import taxes on finished panels stood at 28.73 percent, including customs duty, VAT and advance taxes. Imported cells attracted taxes of 27.5 percent, a difference of just 1.23 percentage points. This narrow gap offered local assemblers little tariff advantage when importing cells instead of finished panels.
The June 2026 budget removed customs and other import duties on key solar equipment, with concessions for panels and inverters scheduled to remain in place until June 2031. However, VAT and advance income tax still left a total tax burden of 17 percent. A September order subsequently reduced the total to 1 percent for 180 days on eligible imports, including panels, inverters and mounting structures. “Currently, with import duty at 1 percent for solar panels, it will be very difficult to make local assembly or manufacturing viable,” Moin says.
Import duties, however, are only part of the problem. The competitiveness of local manufacturers also depends on production scale, input costs and technical expertise. Lower import duties make equipment more affordable for consumers and project developers, but they also intensify competitive pressure on local assemblers.
Ahmed and Moin both point to India, which protects domestic manufacturers through approved-manufacturer lists and domestic-content requirements. Nevertheless, India’s panel plants operate at only 35 to 40 per cent of their capacity, while its solar cell production capacity is approximately one-seventh of its panel production capacity. India’s experience suggests that policy protection alone cannot guarantee the full utilisation of manufacturing capacity. Building a competitive industry also requires sufficient scale, reliable supplies of inputs and sustained market demand.
Investment beyond panels
Given the high investment costs and technical expertise required for solar panel production, as well as China’s dominance in the industry, the question is which other segments of the solar sector offer more realistic opportunities for Bangladesh. Huda favours inverters, which convert the direct current generated by solar panels into usable alternating current. An inverter may need to be replaced during a panel’s roughly two-decade lifespan. “The inverter is the most fruitful,” Huda says.
Based on RANCON’s cost estimate, the 500 MW of rooftop solar capacity expected to be added in 2026 would require approximately Tk 350 to 450 crore worth of inverters. Chowdhury, who advises Walton, says local production can begin with the assembly of imported circuit boards. Walton has already invested in an inverter manufacturing plant in Gazipur. PRAN-RFL is also building a plant worth approximately Tk 12 crore in Narsingdi, with plans to produce 1,000 inverters a month. However, because the budget’s import concessions for inverters will remain in place until June 2031, local assemblers will have to compete directly with imported products.
Battery manufacturers face different investment requirements and policy conditions. Imported battery packs and mounting structures are scheduled to lose their tax exemptions after June 2028, while materials used in battery manufacturing will remain exempt until June 2030. The domestic market for storage batteries is estimated to be worth approximately Tk 900 crore annually.
PRAN-RFL plans to begin assembling lithium-ion battery packs from imported cells in November, initially adding about 20 percent of their value locally, with a longer-term target of 70 to 80 percent. Walton’s new cell manufacturing plant will initially produce small cells, while manufacturing cells suitable for energy storage systems would require an additional investment of Tk 400 to 500 crore. Assembling battery packs from imported cells can begin with relatively modest local value addition, but manufacturing the cells themselves requires substantially greater technological capabilities and capital investment. “If you try to enforce local production right now, it could backfire,” Ahmed warns.
Quality and service alongside production
Establishing factories and reducing prices will not be enough on their own. The long-term sustainability of Bangladesh’s solar market also depends on product quality, installation expertise and reliable after-sales service. Installation and repair services are already provided locally, but poor service has undermined buyers’ confidence in solar technology.
Sakib Bin Amin, professor of economics at North South University, recalls the problems experienced with solar home systems: “A company sells a low-quality product and leaves. Three months later it breaks down, and the user does not know how to repair it.” Low-quality rooftop solar systems installed merely to secure new grid connections have also damaged building owners’ confidence in the technology, according to IEEFA’s findings in 2023.
Expanding the market will therefore require not only more equipment but also reliable installation, maintenance and repair services, alongside stronger quality assurance mechanisms. The Bangladesh Standards and Testing Institution opened a solar panel testing laboratory in November 2025, but Chowdhury says local manufacturers still obtain international certifications in India or China. Although a domestic testing facility is now in place, securing internationally recognised certification and building buyers’ trust remain important challenges for the industry.
Who pays to protect local production?
Industry figures differ on the kind of state support local manufacturing needs. Ahmed favours public procurement: if government power plants and tenders gave preference to locally produced materials, he says, “it would be a completely different story”. Moin wants rules requiring the use of locally manufactured panels in government procurement, alongside skills development programmes and cash incentives for exports. Chowdhury would begin by waiving import duties on raw materials and machinery used by local assemblers.
Giving preference to locally manufactured products would raise the upfront costs of public projects if those products were more expensive than imports. According to RANCON’s estimate, panels account for about 55 percent of a rooftop solar system’s cost, while inverters make up approximately 20 percent. A public project paying 10 percent more for locally manufactured inverters than for imported ones would therefore see its total costs rise by about 2 percent. The same price premium for locally manufactured panels would increase overall project costs by approximately 5.5 percent.
If such preferences were confined to public procurement, they would not necessarily lead to higher equipment prices for private rooftop solar buyers. Cash incentives for exports, however, would require additional budgetary funding. The question is how far these additional costs can be justified by the long-term prospect of developing domestic manufacturing capacity, and which forms of support would be most effective in achieving that goal.
Chowdhury says locally manufactured products can match imported brands in quality if they are built and tested to international IEC standards. Ahmed advocates building manufacturing capacity gradually, as India has attempted to do, because ensuring product quality, gaining buyers’ trust and obtaining certification all take time. Amin calls for “subsidy diversification”, redirecting some of the support currently provided to fossil fuels towards solar manufacturing where cost-benefit analyses demonstrate potential long-term gains.
Public procurement could help local factories secure their first orders, but protection or preferential treatment alone cannot establish a competitive industry. Such support will be effective only where sufficient and sustained demand allows manufacturers to expand production, reduce costs and meet buyers’ quality requirements. The central question for Bangladesh’s solar industry, therefore, is at what point local production can become economically sustainable, and how the country can gradually build the capacity needed to reach that stage.
Khairul Hassan Jahin is a journalist at The Daily Star. He can be reached at [email protected].
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