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What is the Reason for Mobile Phone Price Hike in Pakistan?

Introduction:

Mobile phones have become an integral part of our daily lives, providing us with a range of services such as communication, entertainment, and access to the internet. However, the constant increase in mobile phone prices has become a cause of concern for many consumers in Pakistan. In this article, we will delve into the reasons behind the mobile phone price hike in Pakistan and how it has affected the consumers.

Factors Contributing to the Mobile Phone Price Hike in Pakistan:

Taxes and Duties:

One of the major reasons behind the mobile phone price hike in Pakistan is the high taxes and duties imposed on mobile phones by the government. According to a report by the Pakistan Telecommunications Authority (PTA), the government charges a 19.5% sales tax and a 2% advance income tax on mobile phones. In addition to this, the Federal Excise Duty (FED) on mobile phones ranges from Rs. 150 to Rs. 300, depending on the type of phone. These taxes and duties significantly increase the cost of mobile phones, making them unaffordable for many consumers.

Exchange Rate Fluctuations:

Another factor contributing to the mobile phone price hike in Pakistan is the fluctuation of the exchange rate. As most of theOppo, Samsung, iPhone, Realme and Redmi mobile phones are imported from foreign countries, the fluctuation of the exchange rate affects the price of these phones. For instance, if the exchange rate of the Pakistani rupee against the US dollar decreases, it will lead to an increase in the price of imported mobile phones as the cost of purchasing these phones in foreign currencies will also increase.

Limited Competition:

The mobile phone market in Pakistan is dominated by a few brands, which limits the competition among these brands. As a result, these brands have the power to set higher prices for their products without worrying about losing customers to competitors. This lack of competition results in higher prices for mobile phones in Pakistan.

After-Sales Services:

Another factor contributing to the mobile phone price hike in Pakistan is the high cost of after-sales services. Many consumers prefer to purchase mobile phones from authorized dealers as they offer a range of after-sales services such as repair and maintenance. However, these services come at a high cost, which is reflected in the overall price of mobile phones.

Impact of the Mobile Phone Price Hike on Consumers:

The mobile phone price hike in Pakistan has had a negative impact on consumers, especially those belonging to lower income groups. Many consumers are unable to afford high-priced mobile phones, forcing them to opt for cheaper alternatives, which may not have the same features and quality as the more expensive brands.

Furthermore, the high cost of mobile phones has also resulted in a decrease in the number of mobile phone users in Pakistan. According to a report by the PTA, the number of mobile phone users in Pakistan has declined from 168 million in 2019 to 164 million in 2020. This decline can be attributed to the high cost of mobile phones, which has made it difficult for many consumers to afford them.

These factors have had a negative impact on consumers, especially those belonging to lower income groups, making it difficult for them to afford high-priced mobile phones. It is essential for the government to address these issues and find ways to reduce the cost of mobile phones in Pakistan to make them more accessible to all consumers.

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