A new customs exemption policy allows Bahraini factories to import key industrial inputs duty-free under specific conditions, marking a strategic shift to boost manufacturing, lower costs, and enhance local competitiveness.
New customs rules unveiled to support local industry
Bahrain has issued Decision No. (63) of 2025, a regulatory move that allows factories to import certain raw materials and production inputs without paying customs duties, provided specific conditions are met. The policy, which took effect ahead of September 2, 2025, aims to reduce input costs for manufacturers and strengthen domestic industrial resilience.According to the new rules, four main criteria will determine eligibility for duty exemptions:
- If the required input is not produced in Bahrain.
- If it is unavailable in the required standards locally.
- If it cannot be manufactured within the necessary timeframe.
- Or, under the “10 per cent rule”, if the cost of producing the input locally exceeds the cost of importing it by more than 10 per cent.
These conditions are designed to give manufacturers greater flexibility in sourcing materials and ensure that their supply chains remain uninterrupted and competitive, especially in high-value or time-sensitive production scenarios.
Strategic move aligned with national economic vision
His Excellency Abdulla bin Adel Fakhro, Bahrain’s Minister of Industry and Commerce, described the decision as a “strategic step to boost national industries and develop local content.”He noted that the manufacturing sector remains a central pillar of Bahrain’s economy, and this policy is intended to provide tangible support for its expansion. The move is also a part of broader efforts to replace imports with high-quality local alternatives, enhance self-sufficiency, and contribute to sustainable industrial development.“This initiative will help replace imports with high-quality national products, increase self-sufficiency, and strengthen the industrial sector’s role in sustainable development,” the minister stated.Mr. Fakhro emphasized that the customs exemptions are directly aligned with two key national frameworks:
- The Industrial Sector Strategy (2022–2026)
Bahrain Economic Vision 2030
He added that these exemptions are expected to increase production efficiency, attract investment, and help position Bahrain as a regional and international industrial hub.
Economic impacts and supporting industrial programs
The new exemption rules are not only expected to reduce costs but also have wider economic benefits. By making manufacturing more viable, the policy is designed to:
- Encourage expansion of local factories
- Support the creation of new jobs
- Sustain and grow the export footprint of Bahrain-made products
Officials highlighted that the policy complements a series of national initiatives aimed at strengthening the local manufacturing base and reducing dependency on foreign goods.Among these is the Takamul programme, which incentivizes companies that prioritize local spending and hire Bahraini nationals, especially in government tenders.Other industrial support initiatives include:
- ‘Made in Bahrain’ trademark – granted to products with at least 35% local content, promoting national branding and local pride.
- ‘Green Factory Seal’ – awarded to manufacturers adopting sustainable and environmentally responsible practices.
- ‘iFactories’ programme – aimed at encouraging digital transformation and smart manufacturing technologies in local industries.
Each of these programs feeds into a broader national strategy to improve in-country value, technological capability, and environmental sustainability within the industrial sector.