Budget 26: Govt looking to boost export of ‘made in Pakistan’ mobile phones, say assemblers

Pakistan’s mobile phone assemblers claim the federal and provincial governments will announce a policy in the upcoming budget 2025-26 aiming to boost phone exports. This is to maintain the balance of trade which is likely to widen in the wake of surge in imports from the US in the aftermath of trade talks between Islamabad and Washington, according to several experts that Business Recorder spoke to.

One leading domestic mobile phone assembler told Business Recorder on the condition of anonymity that the government is working to announce a rebate on export of mobile phones in the upcoming budget, scheduled to be announced on June 10.

More luxury items set to attract sales tax in upcoming Pakistan budget

Separately, Muhammad Idrees Memon, a former president of Karachi Electronic Dealers Association (KEDA), told Business Recorder that the federal and provincial governments are designing a policy similar to the Export Facilitation Scheme (EFS) which will incentivise the export of ‘made in Pakistan’ mobile phones.

Both federal and provincial governments were approached to confirm the development. They were yet to reply by the time of filing this story.

Memon, who is also a former president of Karachi Chamber of Commerce and Industry (KCCI), said the Sindh government and KCCI are currently in talks about removing or reducing the Infrastructure Development Cess (IDC) on the import of mobile parts (CKD/completely knocked down) for those manufacturers who want to export their products.

The IDC is being collected in the range of 1.81% to 1.85% on imports at the provincial level.

He also said the Sindh government will finish working on the export package for mobile phone exporters “over the next two to three days (by Wednesday)” and announce it in the budget.

“The Punjab government has already agreed to a similar export package. The ministry of finance, ministry of commerce, Federal Board of Revenue (FBR) and Engineering Development Board (EDB) all are supporting us,” he said.

He said Sindh Chief Minister Murad Ali Shah, and PPP ministers and members of the provincial assembly including Mukash Kumar Chawla and Dharejo are working with KCCI leadership to design an EFS-like product to promote and support the phone exports to help partially controlling the likely increase in balance of trade.

He added that Pakistan is considering increasing imports of products including cotton and edible oil from the US to avoid President Trump’s proposal to double tariff to 29% on imports from Pakistan.

Once the provincial government finalizes its tax incentives for exports then the federal government will also join the export package in the making, Memon said.

“There is huge potential and Pakistan can earn a significant amount of foreign exchange through exporting ‘made in Pakistan’ phones,” Memon said.

He said Pakistan is already exporting mobile phones to Middle Eastern countries including Dubai, but the volume of the trade is insignificant. Almost all the Chinese phones - about two dozen brands - available in the country are being assembled locally.

Memon said Pakistan is importing 100% raw material (parts/CKD) for mobile assembling in the country at present. The removal of IDC on imports would enable manufacturers to add value to the products and earn a handsome amount on their exports. In addition to this, this would also help create a new employment generation and promote ‘made in Pakistan’ products across the globe.

China looking to move export base to Pakistan

Meanwhile, Aamir Allawala, CEO, Transsion Tecno Electronics, said that Chinese companies are interested in moving their export base to Pakistan due to availability of labour at a lower cost and to mitigate its risk associated with global trade war. “Pakistan labour cost is only $140 per month compared with $800 in China,” he told Business Recorder.

Almost all leading Chinese brands have already set up their factories in Pakistan including Xiaomi, OPPO, Vivo, Tecno, Infinix, Itel, realme, Redmi and ZTE. “Pakistan can become a hub of export of Chinese brands to markets in Africa, Central Asia and Middle East.

“There is a huge potential on the table. The government should sit together with the local industry and chart a five year forward to take advantage of the changing global trends,” he said.

Pakistan is now assembling almost all global brands of mobile phones locally, increasing the ‘made in Pakistan’ production to 95% of the local demand, while the share of imported phones (finished products) has reduced to merely 5%. The domestic production is saving around 15-20% in foreign exchange, as local assemblers are still importing almost all mobile phone parts from foreign manufacturers.

According to Pakistan Bureau of Statistics’ (PBS) data, the import of mobile phones (CKD/CBU) dropped 14% to $1.2 5 billion in the first 10 months of FY25 compared to $1.46 billion in the same period of the last year.