ISLAMABAD: Under the new Mobile and Electronic Device Manufacturing Policy (MEDMP), the government is proposing a five percent levy on mobile phone imports, reflecting its broader strategy to encourage local manufacturing through fiscal measures.
According to a report of the Policy Research Institute of Market Economy, Pakistan’s draft Mobile and Electronic Device Manufacturing Policy envisions a transition from assembly to manufacturing. Yet the proposed five percent levy on mobile phone imports under the new MEDMP signals another attempt to pursue localisation through taxation.
Under the proposed policy, the government expects to generate USD 368 million during the period 2026-2033 through this levy, with the stated objective of using the revenues to localise mobile phone manufacturing. Much like the previous Mobile Device Manufacturing Policy (MDMP) 2020, ambitious targets have been announced once again in the new draft. The policy aims at achieving 50 percent of localisation of mobile phones by 2033.
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This target, however, closely mirrors the earlier MDMP objective, which sets a localization target of 49 percent by 2023. That target was not met. Except for a few casings, virtually no major components are being manufactured locally. The policy, which was aimed at promoting local industry through the manufacturing of mobile phones, resulted only in the assembly of mobile phones. While nearly 95 percent of domestic demand is now met through “local production,” this is largely assembly using imported components rather than true localization. Heavily taxed Completely Built Units (CBUs) discouraged imports, while imports of Completely Knocked Down (CKD) kits increased in response, thus substituting one form of import dependence for another.
An assessment of MDMP 2020’s outcomes shows limited progress beyond a few locally manufactured casings, employment creation, and some exports of mobile phones. Yet, the new policy has been formulated without examining why localisation failed to materialise as envisioned in the MDMP.
Instead of addressing the factors that possibly hindered the localisation, such as technology transfer gaps, inadequate skills, and broader structural weaknesses, the new policy simply introduces revised targets with a new deadline. It is wishful thinking that imposing levies increases the domestic capability. Mobile phones in Pakistan already face a heavy tax burden, with cumulative taxes in some cases reaching as high as 55 percent of the handset price. If customs duties, regulatory duties, and sales tax failed to incentivize local production of critical components, an additional five percent levy will only push prices higher.
The transition from assembly to manufacturing requires deep ecosystem development, including component suppliers, skilled labour, reliable energy, and access to global value chains. None of these challenges could be resolved by making imported phones more expensive.
Equally problematic is the government’s implicit assumption that mobile phones are luxury items, because they are not. This framing is economically outdated. When long-term strategies and five-year plans emphasize a Digital Pakistan agenda, the very tools required to drive this transition shouldn’t be taxed as luxuries. Millions rely on mobile phones for employment, education, and digital markets. Treating phones as revenue-generating imports undermines national objectives of digital inclusion, financial inclusion, and productivity growth.
Copyright Business Recorder, 2026
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