The government of Nepal has extended the ban on phones worth $300 and above till Mangsir 29. The government previously slapped restrictions on luxury phone trading in Nepal till Ashoj 28 which is now going to last more till further notice.
The smartphone business has been hotly scrutinized in Nepal to revert dwindling foreign exchange reserves. The ban includes the trading of phones worth $300, motorbikes of 150 CC, beverages, snacks, and many other ‘luxury’ items.
The ban was first imposed on mobile phones including luxury goods back in Baisakh. But the ban only included phones that were worth $600 and above which only affected expensive phone imports, ineffective to contain outflow of the cash. The latest extension of the phone ban is certain to severely impact mid-range to upper mid-range as well as high-end phone business around the festive times of Tihar.
With the latest ruling, the commercial banks won’t be able to issue the Letter of Credit (LC) for the phones coming within the range of the cost.
The government has attributed the decision to ban phone trading to the liquidity crisis in the country. The lack of US dollar reserves has alarmed experts, people, and the government alike. As one of the key measures, the government has restricted multiple luxury goods imported to Nepal.
The previous ban on phones worth $600 drew mixed results. The mobile phone import turned low in quantity, but the spending kept mounting owing to the underthought policy. Nepal is a midrange phone market and banning expensive phones was not going to help save foreign currency reserves at large. But the $300 phones ban has effectively hit the imports of mid-range and flagship phones in Nepal.
The ban on phones costing $300 could seriously impact the market in Nepal
In Nepal, smartphone manufacturers such as Xiaomi and its subsidiary Redmi, Samsung, Realme, Vivo, and other brands enjoy a large share of the market presence. And most of their phones arrive in Nepal under the midrange tier. So, this ban will hurt the smartphone market for phones with a $300 manufacturing price which is the upper-mid-range tier. While the low-tier mid-range and entry-level or feature phones won’t be impacted, people looking for feature-rich mid-rangers and above need to compromise for now.
Despite a small market size, Nepal still spends heavily on mobile phones. As per the latest figures, phones worth Rs 3.6 billion were imported around Dashain. The ban will effectively hurt the Nepali smartphone market and if you were planning to buy an “expensive” phone anytime soon, it might not be easy to get one. Plus, be careful while buying any phone and ensure it is registered in MDMS. If you want to learn more, follow this post to learn about MDMS and find the steps to register your phone.
Is stretching the ban on phones going to help save the current liquidity problem in Nepal? Or do you think the government should ease off its scrutiny of the smartphone market? You can share your input in the comments below.
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