Pakistan Mobile Output Pressure Taxes and AI Chip Race Impact Industry
Pakistan’s mobile sector is under pressure due to taxes and the global AI chip race. The mobile output pressure is now shaping production trends. Many firms have shifted toward assembling basic 2G feature phones. However, smartphone output has slowed due to rising costs. The industry still supports around 50,000 direct jobs. In addition, global brands like Samsung, Xiaomi, and Oppo remain active in the market.
Growth Since Local Manufacturing Policy
Pakistan has made strong progress in recent years. Before 2019, the country relied on imported phones. However, the launch of the Mobile Device Manufacturing Policy (MDMP) in 2020 changed the game. As a result, over 90% of phones are now assembled locally.
This shift reduced import dependence and improved local capacity. Therefore, Pakistan now acts as a growing assembly hub.
Taxes and Policy Issues Slow Progress
Despite progress, tax issues continue to hurt growth. Industry leaders highlight “reverse cascading” as a major problem. For example, raw materials face duties of up to 25%. Meanwhile, finished accessories often enter at lower or zero taxes. This imbalance discourages local production. As a result, companies prefer importing finished goods instead of manufacturing locally. Experts also say policy inconsistency creates uncertainty. Therefore, global brands hesitate to invest in local component production.
Export Potential Remains Strong
Pakistan still holds strong export potential. Lower labor costs give the country a competitive edge. However, the industry needs better incentives to grow exports. For instance, a planned 3% R&D allowance was never implemented. Now, manufacturers are pushing for an 8% export incentive. In comparison, India offers about 10% incentives under its PLI scheme. Because of stable policies, India’s mobile exports now exceed $25 billion. Pakistan aims to follow a similar path.
Future Outlook and Industry Demands
Industry projections show positive long term benefits. Between 2026 and 2031, local manufacturing could save over $2.3 billion in foreign exchange. In addition, import dependence may drop significantly by 2030. This would strengthen economic stability.
Stakeholders urge the government to act quickly. They want stable taxes, better incentives, and support for local components.
If these steps are taken, Pakistan can reduce mobile output pressure and unlock its full potential.
