Pakistan approves its first Mobile Device Manufacturing Policy

• Ministry of Industries and Production initiated Mobile Device Manufacturing Policy in January 2019 by designating Engineering Development Board (EDB) as a secretariat for policy formulation.

The Economic Coordination Committee (ECC) has approved in principle Pakistan’s first Mobile Device Manufacturing Policy.

After a detailed briefing on various aspects of the policy, the ECC directed the Ministry of Industries and Production to further fine-tune its various features and incentives for promoting localization and research and development leading to export of mobile phones.

Ministry of Industries and Production initiated Mobile Device Manufacturing Policy in January 2019 by designating Engineering Development Board (EDB) as a secretariat for policy formulation through consultation with public and private sector stakeholders.

As per details, the policy has been prepared with objectives of technology acquisition and localization of mobile devices through local investment, Joint Ventures, Foreign Direct Investment etc, creation of 200,000 direct and indirect jobs, price reduction for consumers, increase in digitization through supporting 4G/5G technologies, development of efficient manufacturing eco-system, exports of competitively manufactured handsets and achievement of security objectives.

The major recommendations of the policy are as follows: (i) removal of Regulatory Duty for CKD/SKD manufacturing by PTA for approved manufactures under Input/Output Co-Efficient Organisation (IOCO) approved quota;(ii) removal of fixed income tax on CKD/SKD manufacturing of mobile devices up to $ 350 category;(iii) increase in fixed income tax on $ 351-500 category by Rs 2000 and $ 500 by Rs 6300 on CKD/SKD manufacturing; (iv) removal of fixed sales tax on CKD/SKD manufacturing of mobile devices;(v) PTA activation may be restricted to locally manufactured handsets imported formally as CKD/SKD kit (8517.1211) under IOCO quota and not under HS Code 8517.7000,ie, parts; (vi) in up to $ 30 category, words “except smart phones" to be inserted for CBU imports under 8517.1219 to avoid misdeclaration; (vii) R&D allowance of 3% to be given to local manufacturers for exports of mobile phones;(viii) mobile phones to be added to Appendix-C of Import Policy Order2016 to restrict their commercial import in used condition; (ix) Government to commit to ensure maintaining tariff differential between CBU and CKD/SKD; (x) local industry to ensure localization of parts and components as per roadmap; (xi) EDB to act as Secretariat of Mobile Phone Manufacturing Policy and ensure development of allied parts, components and devices.