The government is moving to establish a specialised Defence Economic Zone (DEZ) as part of a long-term plan to build a self-reliant, export-oriented military industrial base.
The ambitious initiative will focus on producing drones, cyber-technology systems, arms, and ammunition for the armed forces and national security agencies while also targeting export markets.
Officials estimate that the defence manufacturing sector will require an investment of around Tk 15,000 crore, to be mobilised through the revenue budget, public-private partnerships (PPPs), joint ventures, and foreign direct investment (FDI), according to a report published by The Business Standard.
Policy green light and early groundwork
According to officials involved, Chief Adviser Muhammad Yunus has already approved a set of policy measures to facilitate technology transfer, joint investment, and FDI inflows into the sector.
The decision to establish a dedicated zone was taken at a September meeting chaired by Chowdhury Ashik Mahmud Bin Harun, Executive Chairman of the Bangladesh Economic Zones Authority (Beza), which was attended by senior civil and military officials.
Minutes of the meeting, obtained by The Business Standard, show that several foreign governments and companies have expressed interest in investing in Bangladesh’s nascent defence manufacturing sector.
“Work is under way to establish the zone and attract both domestic and foreign investment,” Ashik Chowdhury told the newspaper on Thursday. “The location and land size have not yet been finalised. We are developing the policy framework and engaging with friendly countries. The goal is to make the defence sector export-oriented.”
Ashik Chowdhury, who also serves as Executive Chairman of the Bangladesh Investment Development Authority (Bida), declined to comment on whether China or Türkiye were among the interested partners.
Defence production push
Officials said Chief Adviser Yunus approved the initial policy framework on April 30, and the Bangladesh Army has since been tasked with drafting a concept paper for a comprehensive national defence industry policy at Beza’s request.
Bangladesh’s domestic demand for defence products is estimated at Tk 8,000 crore annually, covering the armed forces, Border Guard Bangladesh, Coast Guard, police, Ansar and VDP, and other security agencies. A domestic manufacturing base could meet much of this demand and eventually expand into exports.
They added that foreign companies have already proposed setting up joint ventures to produce military equipment locally, but several policy and legal barriers remain unresolved.
Finance Secretary Md Khairuzzaman Mozumder, who attended the meeting, said the defence industry must follow global models such as McDonnell Douglas and Lockheed Martin, where the private sector plays a central role.
“Tk 15,000 crore may not be available from a single year’s budget, but it can be allocated over several fiscal years,” he told the meeting. The Finance Ministry would support land acquisition, possibly using land from unused state-owned factories. He also suggested launching a short-term project to establish the zone quickly.
Bangladesh’s lag in regional defence manufacturing
Meeting documents reveal that Pakistan invested about $450 million annually in defence production over the past four years, while India invested $2.76 billion per year. In comparison, Bangladesh’s progress remains limited even after five decades of independence.
Commerce Secretary Mahbubur Rahman told the meeting said Bangladesh could realistically match Pakistan’s level of investment in the medium term. He suggested the proposed defence zone could be modelled after the Bangladesh Ordnance Factory in Gazipur.
Other officials noted that in India and Türkiye, defence production expanded mainly through private-sector participation, and Bangladesh’s large industrial conglomerates could play a similar role if proper incentives are in place.
However, an additional secretary from the Industries Ministry at the meeting warned that foreign investors typically seek guarantees and policy clarity. He said the Defence Procurement Act and related laws currently restrict private participation and must be revised to open the field to investors.
Institutional framework: Two committees formed
The September meeting decided to establish two high-level bodies to steer the process:
Defence Industry Policy Implementation Committee – chaired by the minister or adviser for the defence ministry, to draft and execute the National Policy on Defence Industry Development.
Bangladesh National Defence Industry Development Coordination Council – to supervise and coordinate implementation across ministries.
Chief Adviser Muhammad Yunus currently oversees the Defence Ministry, a role traditionally held by the prime minister under elected governments.
Air Force partnership with China for drone production
In a parallel development, the Bangladesh Air Force (BAF) is partnering with China to establish an unmanned aerial vehicle (UAV) manufacturing plant through a technology transfer agreement. Construction is expected to be completed by December, marking a major milestone in Bangladesh’s defence industrial capability.
China has also proposed setting up an aircraft overhauling facility in Bangladesh. According to meeting minutes, the proposal envisions integrating BAF’s existing technical capacity and manpower to enable engine overhauling for popular aircraft models used in the region — a move that could attract foreign investment.
BAF officials said their Aeronautical Research and Development Centre, set up two years ago, has already designed and flown four aircraft, including prototypes for training and sport models. They called for university partnerships to develop a skilled workforce for aviation and aerospace engineering.