The Engineering Development Board (EDB), operating under the Ministry of Industries and Production, has unveiled a new budget proposal aimed at reshaping Pakistan’s mobile device manufacturing landscape. The draft, part of the Mobile Device Manufacturing and Export Policy (MDMEP) 2025–28, recommends a revised tariff structure for Completely Built Units (CBU) and Semi/Completely Knocked Down (SKD/CKD) mobile phones, alongside a cascading tariff framework for individual components.
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Current Tariff Landscape: Under current regulations, CBUs imported under HS Codes 8517.1390 and 8517.1419 are taxed based on their Cost, Insurance, and Freight (CIF) value. For example, smartphones with a CIF value of up to USD 30 incur an 18% sales tax, a PKR 300 Customs Processing Tax (CPT), PKR 100 Regulatory Duty (RD), and PKR 100 Withholding Tax (WHT). These rates rise significantly with the value of the phone—devices above USD 700 face a 25% sales tax, PKR 22,000 CPT, PKR 16,000 RD, and PKR 11,500 WHT.
SKD/CKD mobile phones under HS Codes 8517.1310 and 8517.1411 currently attract an 18% sales tax at import, along with varying levies depending on their CIF value.
Key Proposals Under MDMEP 2025–28: The EDB’s proposal introduces substantial revisions to favor local assembly over CBU imports. Notable recommendations include:
- Higher duties on imported CBUs: For instance, the duty on mobile phone chargers in CBU form would rise from 11% Customs Duty (CD)—or 4.17% under the China Free Trade Agreement (FTA)—to 20% CD with a 15% RD under the FTA.
- Zero duties on components in kit form: Essential parts like chargers, batteries, and other modules used in local assembly would enjoy duty-free status, incentivizing domestic production.
Cascading Tariff Strategy: At the core of the new policy is a cascading tariff structure, designed to reduce duties progressively as components move closer to final assembly. This tiered approach is intended to boost local value addition and encourage end-to-end manufacturing in Pakistan.
The proposal suggests:
- 0% duties on key components like charging ports, flex cables, power ICs, audio modules, battery packs, camera units, display assemblies, USB cables, and more.
Intended Impact: The revamped tariff model is expected to:
- Promote local manufacturing and job creation
- Reduce Pakistan’s dependence on imported smartphones
- Offer potential price relief to consumers
- Enhance government revenues through structured industrial growth
The MDMEP 2025–28 presents a strategic roadmap to position Pakistan as a competitive mobile device manufacturing hub in the region, with a focus on sustainability, self-reliance, and export potential.
