ISLAMABAD, Nov 17: Pakistan spends about $1 billion annually on the import of cellular mobile handsets, which is not only a burden on the country’s foreign reserves but increases the trade deficit as well, said Pakistan Telecommunication Authority (PTA) in its annual report 2007.

The report said that the exponential growth in the country’s fastest growing telecom industry was burdening the overall imports.

In the last four years Pakistan spent $1.7 billion on the import of cellular mobile handsets. In 2006-07 imports of the telecom sector were about 4.4 per cent of the total imports compared to only 2.4 per cent in year 2003-04.

Imports of cellular mobile sets with battery shot up from $144.1 million in 2003-04 to $670.2 in 2006-07. Similarly other telecom apparatus imported into the country went up to $677.5 million in 2006-07 compared to $234.8 million in 2003-04.

Pakistan is striving to decelerate the imports, PTA said in its report. Imports for 2006-07 were targeted to decline by 2.1 per cent. However, the total imports registered 6.8 per cent increase in 2006-07 ($30.5 billion) compared to previous years’ imports ($28.5 billion).

The authority said that the telecom equipment imports were one of the reasons for increasing the trade gap.

According to the report the government was considering giving incentives to leading manufacturers of cellular mobile handsets and telecom equipment to consider manufacturing mobile sets and other equipment locally where more than two to three million subscribers were being added on cellular mobile networks every month.

According to PTA estimates, cell phone companies could exploit another 40 per cent of the target market.

PTA claimed that the business environment in the country had been conducive for foreign direct investments (FDI) for the last few years and the trend was expected to continue into the future.

According to the PTA report, about 20 per cent of the mobile users changed their hand sets thrice a year, 20 per cent every two years while 13.3 per cent changed handsets 5 times, 6.1 per cent 11 times and so on.

During 2005-06, telecom sector received over $1.8 billion FDI and emerged as the only sector of the economy to attract such a huge investment.