Finance Minister M Saifur Rahman, however, proposed to reduce the import duty on mobile handset to Tk 300 from Tk 1,500 previously. The import duty will be applicable for all types of mobile handset irrespective of price and quality.

"The demand for mobile phones has been growing steadily over the past few years. I propose rationalisation of its import value," Saifur said in his budget speech.

"I propose a duty of Tk 300 per mobile set at the import level and Tk 1,200 for each SIM card or similar technology at the local stage," he said.

Industry sources said the new tariff rate would push up the start up cost of cellphone subscribers. "This will definitely limit people's ability to start using a mobile phone," an official of a leading cellphone company told The Daily Star.

Bangladesh with a population of about 140 million has below one percent tele-penetration rate with around 10 lakh fixed phones. But the number of cellphones has already reached 50 lakh with a rapid growth of the industry.

Most of the dealers have stopped selling SIM cards of different cellphone operators after the finance minister's announcement yesterday afternoon. Customers rushed to the outlets of SIM cards but most of them returned empty-handed.

However, the government has proposed to reduce the customs duty on telephone machinery to 7.5 percent from existing 15 percent.