The Economic Coordination Committee (ECC) of the Cabinet has approved Mobile Device Manufacturing Policy to promote local manufacturing and assembly of mobile phone handsets.

The policy approved in a meeting of the ECC chaired by Adviser to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh is aimed at ensuring localisation and indigenization of the parts of the mobile phones.

Earlier, the ECC was told that under the Mobile Device Manufacturing Policy, parts of mobile phone handsets will be used for the entire range of mobile phone handsets produced in Pakistan instead of limited to a particular model. The policy will have a positive impact on allied industry including packaging and plasting. The expected arrival of high end brands will give local industry an opportunity to become part of the global value chain. In addition, setting up of R&D centres and an ecosystem for software application is also visualised under the policy.

The ECC discussed various recommendations proposed as part of the policy and approved the following:

a. Removal of Regulatory Duty for CKD/SKD manufacturing by PTA approved manufactures under input/output Co-Efficient Organization (IOCO) approved import authorization.

b. Removal of Fixed Income Tax on CKD/SKD manufacturing of mobile devices up to USD 350 category.

c. Increase in Fixed Income Tax on USD 351-500 USD category by Rs 2000 and USD 500 by Rs.6300 on CKD/SKD manufacturing only.

d. Removal of Fixed Sales Tax on CKD/SKD manufacturing of mobile devices.

e. PTA shall allow activation of handsets manufacturing in the country under import authorization of inputs by IOCO in CKS/SKD kit (8517.1211) and not under HS Code 8517.7000 i.e. parts. This will eliminate misdeclaration in parts category at the import stage. Activation of CBUs imported through notified routes after payment of all levied duties and taxes as fixed by government from time to time shall continue till further amendment.

f. In up to USD 30 category, words “except smart phones” to be inserted for CBU imports under 8517.1219 to avoid misdeclaration.

g. R&D allowance of 3% to be given to local manufactures for exports of mobile phones.

h. Locally assembled / manufactured phones to be exempted from 4% of withholding tax on domestic sales.

i. Government to commit maintaining tariff differential between CBU imports and CKS/SKD manufacturing till the expiry of the policy.

j. Local industry to ensure localization of parts and components as per roadmap included in draft policy.

k. EDB to act as Secretariat of Mobile Phone Manufacturing Policy and ensure development of allied parts, components and devices.

Meanwhile, the ECC also considered a proposal brought forward by the Ministry of National Food Security and Research for an intervention price for cotton 2020-21 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 formers. ECC further directed the Ministry of National Food Security and Research to bring up to 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 Punjab, at the higher government level for introducing some intervention with regard to ensuring better price to the cotton growers.