Islamabad, January 3, 2026: Pakistan is planning to impose a 5 percent levy on imported mobile phones under the proposed Mobile and Electronic Device Manufacturing Policy (MEDMP), as part of its broader push to promote local manufacturing through fiscal measures.
According to a report by the Policy Research Institute of Market Economy (PRIME), the draft MEDMP outlines a transition from mobile phone assembly to full-scale manufacturing. However, the proposed levy reflects another attempt to encourage localization through taxation, rather than addressing deeper structural challenges within the sector.
Government Targets $368 Million in Revenue
Under the proposed policy, the government expects to raise around $368 million between 2026 and 2033 from the 5 percent levy. These funds are intended to support efforts to localize mobile phone manufacturing in Pakistan.
The draft MEDMP sets an ambitious goal of achieving 50 percent localization by 2033, echoing the earlier Mobile Device Manufacturing Policy (MDMP) 2020, which targeted 49 percent localization by 2023.
Past Localization Goals Remain Unfulfilled
The MDMP 2020 failed to meet its localization targets. With the exception of a few locally produced casings, almost all major mobile phone components continue to be imported. Although authorities claim that nearly 95 percent of domestic demand is met through “local production,” this largely involves assembly of devices using imported parts, rather than true manufacturing.
High taxes on Completely Built Units (CBUs) discouraged imports, while imports of Completely Knocked Down (CKD) kits increased, effectively replacing one form of import dependence with another.
Policy Lacks Review of Previous Shortcomings
An assessment of MDMP 2020 shows limited progress beyond minor component manufacturing, some job creation, and small-scale exports. Critics point out that the new MEDMP has been drafted without evaluating why localization failed under the previous policy.
Instead of tackling key barriers—such as technology transfer gaps, skills shortages, and structural weaknesses—the new policy introduces revised targets with a fresh deadline.
Higher Taxes May Push Prices Up
Industry analysts argue that imposing additional levies is unlikely to build domestic manufacturing capacity. Mobile phones in Pakistan already face a heavy tax burden, with cumulative taxes reaching up to 55 percent of handset prices in some cases. If existing customs duties, regulatory duties, and sales taxes failed to spur local component production, an extra 5 percent levy is expected to increase prices for consumers.
Assembly-to-Manufacturing Shift Needs Ecosystem Development
Experts stress that transitioning from assembly to manufacturing requires a strong industrial ecosystem, including component suppliers, skilled labour, reliable energy, and integration into global value chains. Making imported phones more expensive does little to resolve these fundamental challenges.
Mobile Phones Not a Luxury Item
The policy has also drawn criticism for implicitly treating mobile phones as luxury items, a view many consider economically outdated. With the government promoting a Digital Pakistan agenda, mobile phones are essential tools for employment, education, digital markets, and financial inclusion.
Analysts warn that taxing mobile phones as revenue-generating imports undermines national goals of digital inclusion, productivity growth, and financial access, potentially slowing Pakistan’s broader digital transformation.