Even in current smartphone age, feature phones continue to dominate local handset manufacturing as smartphone penetration struggles to gain momentum due mainly to affordability, availability and an illegal inflow of modern handsets in the country.

Feature phones last year accounted for 69 percent of the total handsets produced by local manufacturers, according to the Bangladesh Telecommunication Regulatory Commission (BTRC).

In 2024, local phone-makers produced 2.72 crore handsets, with 1.88 crore being feature phones.

An illegal inflow of smartphones is the primary reason for Bangladesh's low smartphone production, according to industry insiders. They said nearly all phones entering the country from abroad are smartphones.

A large chunk of those items goes to the unauthorised phone market, according to local phone-makers.

Rizwanul Haque, vice president of the Mobile Phone Industry Owners' Association of Bangladesh, said, "Around 35 percent of local handset demand is met by the grey market, severely impacting local manufacturers."

Roughly around seven to eight years ago, smartphone production surged in the local market, but this growth began to taper off over time.

In 2017, following the government's decision to offer substantial tax benefits to encourage local manufacturing, Walton, a leading local manufacturer, produced just 40,000 smartphones, all of which were 3G devices.

By the following year, feature phones -- specifically 2G phones -- accounted for 53.4 percent of the total 22.3 lakh handsets produced.

This shift occurred as 4G technology was introduced in the country, with the majority of smartphones falling into the 4G category.

In 2019, local handset production surged 7.27-fold, reaching 1.6 crore units, with 62.5 percent of them being feature phones.

The trend continued in 2020, when local manufacturers produced 2.4 crore handsets, 66.5 percent of which were feature phones.

In 2021, the number of locally produced handsets grew to 2.95 crore, with feature phones comprising 68 percent of the total.  Similarly, in 2022, feature phones accounted for about 68 percent of the 3.16 crore handsets produced locally.

In 2023, the trend persisted, with 70 percent of the 2.33 crore handsets manufactured being feature phones.

According to the World Bank's Digital Progress and Trends Report 2023, the rate of smartphone usage among mobile phone users in Bangladesh is around 51.77 percent.

This places Bangladesh as the country with the lowest smartphone penetration rate in South Asia, trailing even Afghanistan, which has surpassed Bangladesh with a smartphone usage rate of 55.79 percent, said the report.