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Government To Implement MDMS From Shrawan 2078; Curb Grey Phones

The government will curb grey phones by implementing MDMS in the upcoming fiscal year (starting from Shrawan, 2078). This long-awaited project of NTA is finally going to be realized with full potential.

As per the announcement in the budget for the upcoming FY 2078/79, the Government of Nepal will disable unauthorized phones from Shrawan 1st 2078.

The so-called grey phones have hurt the government’s revenues for years and undermined the telecom’s policies. But now, the government has fixed the date from which it will render those phones useless for telecom service.

The Case Of Grey Phones In Nepal

Grey phones in Nepal are at large. People are using them without any control and regulations. But finally, the Nepal government is gearing up to sort out the issue. As known, the government will implement MDMS (Mobile Device Management System) over the next few months via NTA Project. It has been a long-sought plan that will finally substantiate.

Grey phones are unauthorized devices that people transport unofficially from abroad. Further, they do not pay all of the taxes to import. So, you might even get these phones at a cheaper price.

Checkout: Mobile Phone imports increased in Nepal despite COVID-19 Pandemic

In Nepal’s context, people smuggle phones into the country from India due to open borders. They dodge the customs and sell them inside the country for cheaper prices. Some of those phones could be stolen phones in large quantities from neighboring countries.

Secondly, people working abroad also bring such phones in large volumes every month. Such phones are sold very commonly in major cities in Nepal, especially at border areas and main cities under the nose of authorities. Places, where such phones are bought and sold, are called grey markets.

Nepal imports roughly one million sets of phones monthly. Out of those, 2,50,000 phones remain unauthorized. This has cost the government around NRs. 7 billion every month, Onlinekhabar reports.

Discussion on Grey phones and implement MDMS

A few months ago, Nepal Mobile Distributors Association organized an event in which the stakeholders (NTA, Phone importers, Customs, more) alerted that the grey phones are hurting mobile traders and the government in revenues and user safety.

MDMS to curb Grey Phones

Now to put an end to this, the government has reached the final stage to implement an anti-grey phones strategy in Nepal. It will launch the MDM system in the next fiscal year which will help keep track of every phone used inside the country. It seems the reason for the delay of the MDMS Project has been shorted out. But the second wave of COVID-19 pandemic incited lockdown had a toll on this MDMS project.

MDM system will also help to identify smuggled phones from the legitimately imported ones. It will also help in the retrieval of lost phones if required.

Mr. Purushottam Khanal, Chairman of Nepal Telecommunication Authority said, “The government will implement a whitelisting program through MDMS within three months. After the MDMS is fully operational, every phone will be functional (mobile network wise) only after being registered to NTA.”

Grey phones are sold very commonly and are in use in all parts of the country. “The issue needs to be tackled with a broader approach”, said Mr. Binod Lamichhane, an Inland Revenue Officer at Naya Sadak.

Meanwhile, Tribhuwan International Airport’s customs chief, Mr. Shambhuprasad Marasaini pointed out that “2 thousand people land in Nepal every day. More than 50% of them bring mobile devices with them. They are not legally usable in Nepal.”

Additionally, “the open borders have been conducive for people to evade customs at checkpoints. People cross borders to purchase phones and daily essentials at a lower cost.” Armed Police Force DIG Mr. Ganesh Khada Magar said.

What Will MDMS Do To Your Grey Phone?

When the MDMS system kicks in, it will have several consequences on your grey phone. Let’s conjure up scenarios:

  • First of all, your existing grey phone will not be operational for telecom services from Shrawan 1st.
  • In case such a phone is lost, one cannot lodge a police report for it. If one does, the chances are they will find themselves in jeopardy for using an unauthorized.
  • Your grey phone will be blocked out of any carrier network in Nepal. It will not be compatible with any telecom network from Nepal in the future.
  • Since the unauthorized phone does not receive any signal, its utility will be a bare minimum. You cannot avail of any telecom service and the device becomes almost useless like a brick.

Then again, a grey phone evades government registration, taxes, and regulation. The black marketeer or the smugglers sneak into the country via illegal routers and circulate such phones at large. The public buys them because they come cheap without realizing the broader risk entails. Eventually, it also raises a moral question, whether one should use an illegal phone at all?

Grey Phones Were ‘Invisible’ During The Pandemic

According to the chairman of Mobile Phone Importers’ Association, Mr. Deepak Malhotra, “legitimate and grey phones’ ratio were even in 75/76 fiscal year. However, it went slumped to null during the COVID-19 pandemic.” He concludes that open borders are to blame for smuggled phones in Nepal.

Heavy Tax Encourages Grey Market?

Nepal Mobile Distributors association Chairperson Mr. Dinesh Chulpadho has said the government is already late to curtail the grey phone market in Nepal. He believes the cost of mobile devices is playing a role in widening unauthorized phones in Nepal.

The same mobile device costs less in India than in Nepal even after currency conversion. Those close to borders would rather choose to take risks and buy phones in India and dodge the authorities. They circulate these phones in Nepal as people always opt for devices at a bargain price if available.

The chief added that the government should ease the tax burden on devices to discourage phone smuggling. He claimed that the VAT imposed on mobile devices led to the higher cost of mobile phone devices in the country. “Exempting VAT on mobile phones will help reduce grey phones in the country.” He suggested.

About Mobile Device Management System (MDMS)

MDMS stands for the mobile device management system. The system helps to keep track of every mobile phone operational in Nepal, along with their locations. When this system comes into effect, authorities will be able to track down unauthorized devices and render them unusable on any mobile network within the country.

MDMS system

MDMS is in the news for a long time. It has been in the plan of the Nepal Telecommunication Authority (NTA) for a lot of years. Though the Centralized database of all phones was conceived long back, the MDMS was coined with an NTA project in 2018. But the outcome never materialized. The mobile importers in Nepal have also voiced their concern about its effects on business. As a result, all the stakeholders were standing on the same page. As a result, the NTA chairman had announced the government’s plan to implement MDMS in three month’s time, and now we have the official confirmation from the government

Benefits of Implementing MDMS In Nepal

For now, the government registers IMEI of mobile phones. But this practice also needs to improve as it has not been proportionate to address mobile phone-related issues.

With the introduction of MDM however, it will keep a record of every phone. This will help to keep accurate data of mobile phones that enter the country via legal routes. In case of stolen devices, the owner can request to block the device directly. At the moment, owners have to go through the hassles of first writing an application to the police, inquire at the NTA to locate their phones. Read the detailed process for how to report and track lost/stolen phones online?

The Mobile device management system aka the Centralized EIR system will be beneficial for all; the government, traders, and mobile phone users. It will curb the circulation of unauthorized phones in Nepal and hence contain the grey phone market. The government will raise more revenues at the customs and the owners will be able to assure themselves of their devices’ legality.

Do you think NTA/Government will implement MDMS within the stated time-frame? What is your opinion on Nepal’s tax scheme that is on phone import? Do you think it is contributing to the high portion of grey phones import? Let us know in the comments section below.

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