Duty-Free Raw Material Imports: How Bahrain Is Making Manufacturing Setup Cheaper

What is the single biggest worry for any company planning to start a factory in the Gulf? The answer is cost. From raw material duties to high import tariffs, the initial setup cost can be a heavy barrier for both small and large investors. For many, this cost factor decides whether they move forward with a Bahrain manufacturing setup or shift plans elsewhere.

To address this pain point, Bahrain has taken a new step. The government has allowed duty-free imports of raw materials and equipment for licensed industrial establishments. This move is part of a wider strategy to make manufacturing in Bahrain more affordable, reduce overall costs, and attract new investment. We at Jitendra Consulting Group are here to guide businesses through these changes.

New Rules on Duty-Free Raw Material Imports

Bahrain announced a major policy shift in 2025 through Decision No. 63. The rule states that factories can now benefit from customs duty exemption when importing raw materials, semi-finished goods, equipment, and packaging materials.

The rule is simple in purpose: lower the cost of manufacturing in Bahrain and ensure that businesses stay competitive. According to news reports, exemptions apply when local substitutes are unavailable, or when their price is at least 10 percent higher than the cost of imports. The change directly supports Bahrain raw material imports and creates a cheaper way to set up industries.

Key Conditions for Duty-Free Imports

The exemption is not open-ended. It works under specific conditions that give protection to both local producers and industrial investors. Manufacturers can import duty-free when:

• The raw material is not produced locally in Bahrain
• The local version does not meet required quality or technical standards
• Delivery timelines from local sources do not match industrial schedules
• The local cost of production is higher by at least 10 percent compared with import

These conditions ensure that duty-free imports in Bahrain are used only when necessary, while still making it possible for investors to build a cheap manufacturing setup Bahrain industries need.

How Duty-Free Imports Lower Setup Costs

Every company that plans a Bahrain manufacturing setup has to calculate the cost of machines, spare parts, and inputs. A 5 percent customs duty may sound small, but when you import in bulk it becomes a large burden. By removing this charge, Bahrain gives investors breathing space in their budgets.

Duty-free imports in Bahrain mean that factories can now focus more capital on production, workforce training, and technology. This lowers the cost of manufacturing in Bahrain over time and encourages businesses to expand capacity. In short, the policy supports companies from the very first stage of their setup journey.

Industrial Growth and Foreign Investment

The raw material import policy Bahrain has introduced is more than a tax cut. It is a long-term industrial growth plan. By allowing cheaper inputs, the government expects more factories to be set up in Bahrain. This will create jobs, attract new technology, and raise export capacity.

Foreign investors often hesitate when duty structures are unclear. By simplifying the process and giving clear exemptions, Bahrain sends a signal that it supports fair and predictable rules. This helps create a more attractive investment environment, especially for SMEs and corporates looking for affordable bases.

Why Bahrain Is Becoming a Manufacturing Hub

Bahrain has always had a strategic location, but with these new rules the country moves further ahead as a regional base for industries. Investors see three clear benefits:

1. Lower initial investment through duty-free imports of raw materials and equipment
2. More predictable cost of manufacturing in Bahrain, which helps in planning
3. Strong policy support through the raw material import policy Bahrain is now enforcing

This makes manufacturing in Bahrain attractive not only for local companies but also for international players who want to use Bahrain as a production and export hub.

Challenges and Considerations for Businesses

Even though the benefits are clear, companies need to understand the rules properly. Approvals are only available for licensed industries. Businesses must apply under the proper categories and ensure their imports meet exemption standards. Without proper compliance, delays can happen.

This is where expert advice becomes important. Knowing how Bahrain supports manufacturing through its laws is one part, but applying them correctly to your business plan is the real step that ensures savings.

How Can Jitendra Consulting Group Help?

For any business that wants to reduce costs, the question is not whether to apply, but how to apply. JCG can do that for you. Our team has in-depth knowledge of Bahrain’s industrial policies and can assist with licensing, exemption applications, and compliance. We help SMEs, corporates, and global investors navigate the system so that they can take full advantage of duty-free imports in Bahrain.

At Jitendra Consulting Group, we focus on reducing the cost of manufacturing in Bahrain and supporting you in building a cheap manufacturing setup Bahrain industries need. With our expertise, you can make the most of the raw material import policy Bahrain has introduced and move towards long-term growth.