NTA moves to extend the MDMS registration period for grey phones

After a lot of back-and-forth, NTA (Nepal Telecommunications Authority) finally implemented MDMS (Mobile Device Management System) in Nepal from Jestha 1, 2080 (May 15, 2023). The authority had also set provisions to register grey handsets until the end of Asadh by paying a certain amount depending on the type of phone. But as it turns out, only a handful of people actually registered their devices into MDMS. Which is why NTA is preparing to extend the MDMS registration period for grey phones. Let’s learn more.

What is Mobile Device Management System (MDMS) in Nepal?

MDMS is a centralized government-owned system to keep a record of any and all phones and similar electronic accessories that enter the country — via their unique IMEI number(s). This includes smartphones, feature phones, bar phones, tablets, etc. So, any gadget with SIM, basically. After its implementation:

• Phones not registered at NTA (illegal/grey imports) will be blocked from any and all carrier networks (NTC, Ncell, Smart) in Nepal.
• This means that you will be able to use other functions of the phone like connecting to WiFi, streaming videos, etc. but making/taking phone calls and messages won’t be possible.
• Think of it as iPhone vs iPod Touch. iPhone is how your unregistered device is right now whereas it’ll transform to iPod Touch once MDMS goes live. No cellular connectivity while everything else you’d expect from a smartphone will work perfectly fine.
• And if and when you lose such phones, you won’t be eligible to file a police complaint either. On the other hand, Nepal Police and other concerned authorities can help you track your lost or stolen phones if they are registered under MDMS.

MDMS registration period for grey phones to be extended

During the budget announcement for 2080/81, it was announced that NTA would set a provision for registering grey handsets that had been in use in Nepal by Jestha 15, 2080 (May 29, 2023). And to legitimize those phones under MDMS, NTA recently announced a fee structure for different types of phones alongside a registration portal. While the final date to register said handsets was set until Aashadh 31, 2080 (July 16, 2023).

But to everyone’s surprise, only a handful of people actually bothered — or even knew about — this rule.

NTA’s latest data suggests that there are over 5 million unregistered grey phones in Nepal. But Tech Pana reports that only 2,241 handsets have been registered into MDMS by paying the appropriate fee so far. Ouch!

Since the majority of grey phones remain unregistered, it has posed a significant challenge for NTA to move forward. There is currently no provision in the Finance Bill 2080 about how such unregistered grey phones should be handled. And speaking to Technology Khabar, NTA’s assistant spokesperson Mr. Achyutananda Mishra assures that such grey devices will stay in operation for now.

But there are already reports suggesting that the Ministry of Finance is preparing to extend the MDMS registration period by one month. And we should be getting an official statement shortly. Whereas the ministry is also expected to make preparations to block those phones that aren’t enrolled in MDMS even after the added time for registration.

How many phones can you bring to Nepal?

Okay, since MDMS has created a whirlwind of confusion regarding how many phones you can bring from abroad, let’s get to that now. According to the “Personal Use Goods Order 2077”, you’re allowed to bring one mobile phone to Nepal for free. And you can register it into MDMS without declaring it in the customs office. Foreigners traveling to Nepal who plan to stay for more than 15 days will also be required to register their handsets.

But Nepali migrant workers who’ve taken labor permit and have been working abroad for at least 6 months can bring an additional mobile phone without paying any tax when returning to the country. And they can register their devices into MDMS after following proper protocols in the customs office.

To reiterate, this exemption is only applicable to migrant workers and not anyone else. So if you’re coming back to Nepal from a vacation, as a student, or something else, you will have to pay 13% VAT and 5% excise duty on every additional smartphone you bring.

How to check if your phone is registered under MDMS?

Now, in order to verify if your handset is officially listed in MDMS, you can head on to “mdms.nta.gov.np“. You’ll see two input fields there; one to check if your existing phone(s) is registered in the system, and the other to verify whether the phone you’re about to purchase is logged into MDMS or not.

At the time of writing this article, we can verify that unregistered phones are working perfectly fine for now. Including phone calls, mobile data, SMS, and everything. But NTA says those phones will be blocked from the network of Nepali telcos in 2 months unless they’re individually registered.

How can I register my phone in MDMS in Nepal?

But if you’ve purchased a smartphone after Jestha 15, 2080 illegally or through the grey market, you won’t be able to register it in the MDMS system. However, those who brought their phone from a foreign country or a smartphone as a gift for a loved one can register that device in the MDMS with valid details such as a purchase bill, personal identity document, immigration department stamp of entry into the country, and so on. There are four new steps to register an IMEI number in the MDMS system, which we will list here:

• In order to enroll your phone in the database, click here.

 Step 1:

• This is a fairly simple step in which you need to enter the IMEI number, smartphone brand, model, and whether or not the phone is in use in their respective fields.

Step 2:

• Following that, you must verify your email with an OTP code sent to your email address by NTA.

Step 3:

• In this step, you must enter information about when and from where you arrived in Nepal, as well as your personal information. Including your passport number, address, arrival details, and more. You will also need to specify whether you intend to use this phone for yourself or it’s for someone else.
• In case of foreign applicants, they must also provide their home country address and the visa validity date. If you decide to extend the visa in the future, you must renew your IMEI validity using the same procedure.

Step 4:

• Finally, the applicant should double-check the information provided. And more importantly, the system will require you to upload a scanned copy of your passport, an entry stamp from the immigration department, and proof of purchase of the smartphone to ensure that it is not grey or illegally imported.
  • (Note: The allowed file type for scanned copies is .jpg, or .jpeg and the image size per file should be less than 512KB.)
• Once NTA completes the background study and verifies your application, it will either dis/approve the application.
  • Do note that this process might not be instantaneous.
• And to check if your phone has been accepted into MDMS, you can visit the same link as above (mdms.nta.gov.np).

For returning Nepali migrant workers

As aforementioned, Nepali migrant workers who have taken labor permit and have been working abroad for at least 6 months can bring an additional handset for free. Without having to pay 13% VAT or 5% excise duty. And to register such phones into MDMS:

Step 1:

• Head to the “Pre Registration Portal” on NTA’s MDMS website and click on the register button.

Step 2:

• Then proceed to get your registration token by clicking on the “Get Token” button. This token will be used to submit your pre-registration application.
  • Proceed to enter your email address and request OTP to verify the email.
  • After verifying the email, you will receive your registration token.

Step 3:

• With the registration token at hand, you are now ready to fill up the pre-registration form. You’ll be required to fill in different details including (but not limited to):
  • The phone’s IMEI, brand, model number
  • Personal info and date of departure, date of entry, and country of departure

Step 4:

• After rechecking all the details, you can proceed to submit the registration form. Or if you’re not sure about some specifics, NTA also lets you save the application for now and continue with the registration process later on.

• In case of a successful application, you will get a downloadable PDF file (pictured above), which you will need to print and submit to the Department of Customs for further processing.

Register grey phones into MDMS

According to NTA’s latest provision, grey-listed phones in use in Nepal until Jestha 15, 2080 can be registered into Mobile Device Management System (MDMS) by paying a certain fee. And while this system was supposed to be live till the end of Ashadh 2080 only — as we discovered earlier — the Ministry of Finance is currently working to extend the registration period by one month. The fee structure is listed below:

Step 1:

• To register such grey phones, go to the “Grey Registration Portal” on NTA’s MDMS website.

Step 2:

• Proceed to fill in all the details, including your phone’s IMEI number(s), personal information, and more.
  • After fact-checking everything you’ve entered, click on “Proceed to next step”.

Step 3:

• You’ll now see the application detail once again. And after confirming everything’s in order, you can proceed to payment.

Step 4:

• The next screen will show you your payment details and payment options, which include eSewa, Khalti, and connectIPS.
  • But at the time of writing this article, we can confirm that payment via eSewa and Khalti isn’t working.

• • Selecting “Khalti” throws an error saying that it’s not one of the available payment getways for Everest Bank Ltd. (the bank account for Birgunj Customs Office).
  • Whereas going with “eSewa” gives a “Product with code NP-ES-Eblgov not active” error.
  • That means connectIPS is the only viable payment option for now.

Step 5:

• So after selecting connectIPS, you’ll be required to log in to your connectIPS account. After successful sign-in, you’ll then get a QR code to make the payment.

History of Mobile Device Management System (MDMS) in Nepal

The sale of smartphones through the grey market has been major a problem in Nepal for a long time. If you’re unfamiliar with the term, grey market basically refers to the distribution/sales of official goods via unofficial channels. This includes everything from stolen phones brought from abroad, bulk personal imports, or those that haven’t received “Type Approval” from NTA. As a result, the government misses out on potential revenue while the official importers lose their business.

And as a remedy, MDMS has now been implemented in Nepal. It was initially proposed to go live from Jestha 2078, however, it was delayed—owing to the second wave of COVID-19 at first and several other reasons in subsequent attempts.

At an event held on Shrawan 27, 2079 with officials from NTA, MPIA (Mobile Phone Importers Association), NMDA (Nepal Mobile Distributors Association), and other concerned authorities, NTA assured that MDMS will go live in Nepal by Bhadra 30, 2079.

The final launch (sort of)

The system went into effect on Bhadra 30, 2079, as planned. But it was a soft launch of sorts and full MDMS modules were absent at the time. And in a new notice, NTA stated that the system would be finally and fully implemented on Poush 15, i.e. December 30, 2022.

The Telecommunications Authority also requested that mobile phones brought from abroad for personal use but not registered in the MDMS system or used prior to August (Bhadra) should be declared to customs with a 15-digit IMEI number. After that, the customs office will provide you with a letter that you can use to register your smartphone in the MDMS system.

Before implementing MDMS, NTA made IMEI registration compulsory in April 2016. The authority even said the phones with unregistered IMEI numbers would be nonfunctional from April 1, 2017. However, citing various reasons, the organization chose not to take action. The online IMEI registration system did not completely nullify the problem either. Thus, NTA planned to implement Mobile Device Management System (MDMS) in Nepal.

This project was initiated back in 2018 and tendered to OSI Consultancy (India), Numera SDN. BHD. (Malaysia), and Namaste Global Communications (Singapore). The cost of building this system is estimated at a little over USD 7 million. As you’d expect, this system will only recognize those imports that have followed due diligence and allow their operation.

Automatic registration

As per NTA’s official notice, mobile phones imported by official distributors are automatically registered under MDMS. Besides this, all handsets imported from abroad for personal use until Bhadra 30, 2079 (September 15, 2022) have been listed in the system as well.

And it NTA also sent out an SMS to all phones* (there might be a few exceptions) officially bought in Nepal informing them that their device has been registered under MDMS. According to NTA’s own statement, phones brought in for personal use also fall under the system but such handsets haven’t received the SMS. Maybe that’s arriving shortly.

Why was MDMS implementation halted in Nepal?

Actually, NTA announced a soft launch of the system on Bhadra 30 last year. And after four months of waiting, the Telecommunications Authority was finally ready to fully implement it on Poush 1. This system effectively solves the burning issue of grey smartphone imports in the country, while also making it easy to track lost or stolen handsets. But with a direct order from the country’s Prime Minister, the system was once again put to hold.

According to the Prime Minister’s Press Secretariat, this decision was a result of a meeting between the Prime Minister and the then Finance Minister (Hon. Bishnu Poudel), where Mr. Dahal instructed to delay the implementation of MDMS in Nepal to make time for further preparations.

NTA’s directive when applying MDMS into full effect was met with widespread criticism since it made importing phones from abroad a bit of a hassle. Any person returning to Nepal could only bring one phone for free in the country. On the other hand, they would’ve been required to pay 13% VAT and either 2.5 or 5% excise duty in the case of bar phones or smartphones, respectively. And if the person brings more than two unregistered phones with them, NTA had even warned that those handsets will be confiscated.

To no one’s surprise, this decision was heavily criticized. Especially among the Nepali diaspora spread across the world, with #noremittance trending across Twitter. But the PM’s directive momentarily put out the fire.

Benefits of MDMS

All the official smartphone distributors/importers will register their devices in MDMS. But, illegally imported devices will be effectively blocked from any national telecom operator’s network. And as I mentioned earlier, the parties involved in such activities will also be subject to legal action as defined by the existing regulation.

Furthermore, the Mobile Device Management System will also let you track your device in case of loss/theft. All in all, the introduction of MDMS is exciting news for the Nepalese smartphone market. Not just the distributors and others, but it will also be massively fruitful for the end customers.

Why is Mobile Device Management System (MDMS) necessary in Nepal?

Currently, mobile importers have to pay 13% VAT and 5% excise duty on mobile imports. Furthermore, the government has dropped the percentage of VAT return to 0% as well. Thus, it is not surprising that the smartphones bought from the grey market come at a cheap price since they effectively skip paying both fees.

According to NMDA, the grey market covers around 25% of the overall smartphone market in Nepal. And right now, there is an increase in the demand for mobile phones. Especially after the Nepal Government levied a ban on the import of handsets above USD 300 in mid-July 2022. Back in April 2022, the ban was originally extended to phones worth above USD 600, citing the declining state of foreign reserves (forex) in Nepal.

Record volume of smartphone imports

The latest report from Customs Department says that 5.63 million phones worth Rs. 39 billion were imported in the first 11 months of the fiscal year 2078/79. That’s the highest ever in the history of Nepal (in terms of valuation, not quantity).

To compare, the volume of smartphone imports amounted to just Rs. 32.09 billion during the entire fiscal year 2077/78. As you could tell, this 21.53% increment was big news for Nepal’s smartphone industry and an indicator of the efficacy of IMEI registration in discouraging grey imports. MDMS will only further strengthen this momentum in the domestic smartphone scene.

Moreover, monetary transactions via smartphones have increased too. Because of this, leaving the smartphone grey market unchecked will only result in its growth due to high demand. And this is a serious concern for the official distributors. Therefore, NMDA had been desperate for the implementation of the MDMS. Not only that, MPIA and NMDA have been slapping holograms in the phone’s box to help customers identify official imports.

• Watch: MDMS in Nepal Explained (Nepali)