Pakistan likely to impose 20% excise duty on mobile phones, plans Rs56 billion tech fund to boost local manufacturing

The federal government is set to impose a 20% federal excise duty on the completely built units (CBU) of new mobile phones, marking a significant policy shift from the current zero-duty structure. Along with this, a 10% customs duty will be introduced on notebooks, desktops, and tablets, as well as on completely knocked-down (CKD) kits, The Express Tribune reported. 

Initially, the CKD duty will be set at 5%, with plans for an increase to 10% at a later stage.

These levies are part of a broader effort to address competitive challenges arising from the Pakistan-China Free Trade Agreement and to support the proposed Mobile and Electronics Manufacturing Framework. 

The government is also establishing a Rs56 billion technology investment fund aimed at promoting local manufacturing of mobile phones and electronic devices.

The Engineering Development Board (EDB) has finalised the Mobile and Electronics Manufacturing Framework, which projects that refurbished mobile phone re-exports could generate $400 million annually. A high-level meeting chaired by Special Assistant to the Prime Minister Haroon Akhtar Khan reviewed the policy on Tuesday, with senior officials discussing its implementation. 

The Ministry of Industries and Production is set to submit the framework to Prime Minister Shehbaz Sharif for approval.

A key element of the framework is the establishment of a dedicated refurbishment-for-re-export system within export processing zones. The government plans to designate a one-acre gated area for refurbishment facilities, where 30 to 40 million mobile phones could be refurbished annually, generating $300 million to $400 million in export revenue.

The framework outlines two options for handling imports under the re-export scheme. The first allows imports for processing and re-export under a temporary import system, with customs supervision and strict IMEI controls to prevent diversion to the domestic market. The second option involves regular commercial imports with full foreign exchange remittance, followed by refurbishment and re-export.

The policy is expected to encourage large-scale manufacturing of mobile phones and electronic devices in Pakistan, with global companies like Apple and Samsung being invited to set up production facilities in the country. The initiative is seen as a critical step in creating jobs, transferring technology, and attracting foreign investment.

CEO of the EDB, Hammad Mansoor, highlighted that the refurbished mobile phone re-exports would play a crucial role in boosting Pakistan's export revenues. The policy also envisions creating a dedicated Mobile and Electronics Devices Cell within the EDB to coordinate and oversee its implementation.