ISLAMABAD, Feb 20: US technology giant Apple Inc. is poised to begin iPhone manufacturing operations in Pakistan after the federal government agreed to extend incentives under a proposed Mobile and Electronics Manufacturing Framework, officials said.

Under the plan, Apple will also refurbish used iPhones in Pakistan for re-export, a move authorities expect will generate $100 million in the first year alone. The framework, currently awaiting approval from Prime Minister Shehbaz Sharif, includes provisions for discounted land, an 8% performance-based incentive, and permission to repair two- to three-year-old devices.

Engineering Development Board (EDB) Chief Executive Officer Hamad Ali Mansoor said the incentives mirror models adopted by Apple in Indonesia, Malaysia and India, where the company initially launched refurbishment operations to train local manpower before transitioning to full-scale manufacturing.

Pakistan currently offers a 6% performance incentive to mobile manufacturers, but the government plans to increase it to 8% to attract Apple and other global players. Mansoor said the proposed policy has the backing of Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan and senior officials in the ministry.

In parallel, the government is anticipating $557 million in investment from Chinese mobile manufacturers following Memoranda of Understanding signed during Prime Minister Sharif’s recent visit to Beijing. Officials say the broader policy aims to position Pakistan as a regional hub for mobile and electronics exports, including laptops, tablets, smartwatches, trackers and wireless earbuds.

The framework also prioritises localisation. Manufacturers have pledged to increase the use of locally produced components from the current 12% to 35% in the first year, with a target of 50% in subsequent years.

To fund technology upgrades and localisation efforts, the government plans to introduce an export levy of up to 6% on high-end mobile phones. Authorities expect the levy to generate Rs62 billion, which will be reinvested in strengthening domestic manufacturing capacity. Phones priced between Rs50,000 and Rs60,000 will be exempt, while devices costing above Rs100,000 will be subject to the levy.

Separately, the government is expanding its electric vehicle (EV) initiative. A Rs9 billion allocation in the current budget is supporting a 40% subsidy for electric two-wheelers, financed partly through a 3% tax on the gross sale value of conventional vehicles.

Officials say Rs12 billion has been collected in six months — exceeding the initial target — creating fiscal space to extend subsidies to electric four-wheelers. A Lahore-based firm is reportedly establishing a plant to produce affordable electric cars priced between Rs700,000 and Rs800,000, comparable to entry-level conventional models.

The next phase of the e-bike programme is expected to eliminate balloting and adopt a universal access model. Authorities also plan to digitise the auto industry’s certification and regulatory processes to enhance transparency and efficiency.