ECC approves 'mobile device manufacturing policy'

The Economic Coordination Committee (ECC) of the Cabinet has approved "mobile device manufacturing policy" to promote local manufacturing and assembly of mobile phone handsets.

A meeting of the ECC chaired by the Adviser to Prime Minister on Finance and Revenue, Dr Hafeez Shaikh, on Thursday approved the policy aimed at ensuring localisation and indigenization of the parts of the mobile phones.

The Ministry of Industries and Production, while briefing on the policy informed the meeting that under the mobile device manufacturing policy, parts of mobile phone handsets, would be used for the entire range of mobile phone handsets produced in the country instead of limited to a particular model.

The meeting was further informed that the policy would have positive impact on allied industry including packaging and plasting as the expected arrival of high-end brands would give an opportunity to the local industry to become part of the global value chain.

Additionally, setting up of Research and Development (R&D) centres and an ecosystem for software application is also envisaged under the policy.

The ECC discussed various recommendations proposed as part of the policy and approved removal of regulatory duty for the CKD/SKD manufacturing by the Pakistan Telecommunication Authority (PTA) approved manufactures under input/output Co-Efficient Organization (IOCO) approved import authorization.

The meeting also approved removal of fixed income tax on CKD/SKD manufacturing of mobile devices up to US$ 350 category and increase in fixed income tax on US$ 351-500 US$ category by Rs2,000 and US$ 500 by Rs6,300 on CKD/SKD manufacturing only and removal of fixed sales tax on CKD/SKD manufacturing of mobile devices.

The ECC also approved proposal that the PTA would allow activation of handsets manufacturing in the country under import authorization of inputs by the IOCO in the CKS/SKD kit (8517.1211) and not under HS Code 8517.7000 i.e. parts after the meeting was informed that this would eliminate mis-declaration in parts category at the import stage.

Activation of the CBUs imported through notified routes after payment of all levied duties and taxes as fixed by the government from time to time would continue till further amendment.

The ECC also approved as part of the policy that in up to US$ 30 category, words "except smart phones" to be inserted for CBU imports under 8517.1219 to avoid mis-declaration and R&D allowance of three percent to be given to local manufacturers for exports of mobile phones, and locally assembled/manufactured phones to be exempted from four percent of withholding tax on domestic sales.

The ECC approved proposed recommendations that the government to commit maintaining tariff differential between CBU imports and CKS/SKD manufacturing till the expiry of the policy as well as that local industry to ensure localization of parts and components as per roadmap included in draft policy and the Engineering Development Board (EDB) would act as Secretariat of Mobile Phone Manufacturing Policy and ensure development of allied parts, components and devices.

On a proposal of the Ministry of National Food Security and Research, the ECC also considered a proposal for an intervention price for cotton 2020-2021 crop by rationalising earlier proposals after fresh consultation with the stakeholders.

The members of the ECC had an in-depth discussion on the matter and maintained that an effective and sustained support to the cotton growers was vital and necessary due to the importance of cotton for the local as well as export industry.

However, such a support should be extended in the form of direct targeted subsidy to the farmers.

The ECC further directed the Ministry of National Food Security and Research to bring up to the ECC proposals for promoting research and development and to improve seed quality and yield per acre.

The ECC decided that since the matter was not federal in nature, a mechanism should also be adopted by the Ministry of National Food Security and Research to engage with the provincial governments, particularly the Punjab, at the higher government level for introducing some intervention with regard to ensuring better price to the cotton growers.