Dhaka, Oct. 31 -- When the government's mandatory mobile handset registration comes into effect on Dec 16, Victory Day, Bangladesh's thriving "grey market" will face its biggest disruption yet.

The Bangladesh Telecommunication Regulatory Commission (BTRC) says over 60 percent of the country's handsets come through grey channels -- phones smuggled in without paying import duties. Traders in that shadow market, however, insist their share is closer to 90 percent, claiming the new rule will destroy livelihoods and drive up prices.

Government officials counter that the measure will instead boost local manufacturing and reduce prices, as domestic producers finally get a level playing field.

The new registration system -- the National Equipm...