NTA Implements MDMS to Curb Grey Phones

The Nepal Telecommunication Authority (NTA) announced on May 14, 2023, that they would be implementing the Mobile Device Management System (MDMS) starting from May 15, 2023.

This is followed by an amendment to the Baggage Rules, 2016, which permits Nepali migrant workers to bring an additional mobile phone, in addition to their personal phone, to Nepal from abroad without incurring any additional fees.

A notice regarding this amendment was published by the TIA Customs Office, Department of Customs on May 13, 2023. The notice also mentions that phones not registered in the NTA’s MDMS system may not operate in Nepal.

NTA Deputy Director Achyutananda Mishra told Techlekh that the authority allows unregistered phones a timeframe of 15 days. After this duration, the phone would no longer be able to use carrier services from any service provider in Nepal.

However, as of now, unregistered phones have not received any SMS notifications from NTA regarding their unregistered status or requesting registration within the given 15-day period.

Thus, it remains to be seen when and how the system will be put into action. Considering the history of multiple announcements without successful implementation, it is not uncommon for the system to encounter issues.

Previously, on December 24, 2022, the NTA had announced that the MDMS would be implemented on December 30, 2022, with the intention of disabling unregistered phones, following the trial in September 2022.

However, following the announcement, Prime Minister Pushpa Kamal Dahal instructed the then Finance Minister Bishnu Poudel to temporarily halt the implementation.

Upon implementation of MDMS, illegally imported mobile phones would no longer be able to use carrier services from any service provider in Nepal. This measure was intended to reduce the import of ‘grey phones’ — phones that are brought into the country through unofficial channels. The MDMS also has the ability to prevent stolen or lost phones from functioning in Nepal.

Click here to learn how to register the IMEI number of the phone that you brought from abroad.

Mobile Device Management System (MDMS) in Nepal

MDMS, or Mobile Device Management System, is a system that keeps track of all the devices functioning in Nepal connected to the cellular network of mobile service providers in Nepal. This includes both registered and unregistered devices in MDMS.

Every mobile phone comes with a unique number called International Mobile Equipment Identity, or IMEI for short. The MDMS utilizes the IMEI number to identify the device.

When users put a SIM card in a mobile device, the IMEI number of the device gets updated to the database of the National Equipment Identity Register (EIR).

The MDMS then blacklists the unregistered devices and whitelists the registered devices. Under the provision of MDMS, mobile network operators (MNOs), such as Nepal Telecom, Ncell, and Smart Cell, will activate mobile communication service only to compliant mobile devices.

Blacklisted, or Illegal, mobile devices will be blocked by mobile network operators from getting mobile service in Nepal as instructed by MDMS.

According to Achyutananda Mishra, joint spokesperson of NTA, this system will identify and track the phones based on the International Mobile Equipment Identity (IMEI) number.

“So, the phones coming through the grey channel will not function,” says Mishra.

The MDMS Bylaws, 2018 mentions that MDMS will instruct network operators to block the blacklisted devices from use in Nepal after six months from the date of commencement of operations of MDMS.

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Will Phones Bought Abroad Work in Nepal? How Many Phones Can One Bring?

NTA Chairman Purushottam Khanal told SunauloNepal that his organization has no intention of bothering Nepali individuals or foreigners who are legally permitted to use phones brought from abroad. The telecom regulator is focused on blocking grey phones that importers illegally import in a huge quantity which causes a big loss of tax revenue for the government.

According to the notice regarding Baggage Rules, 2016 issued by Department of Customs, a permanent resident of Nepal returning from a foreign country can bring one cellular mobile phone without paying customs duty.

Amending to the Baggage Rules, 2016, a notice issued on May 13, 2023, by the TIA Customs Office specifies that migrant Nepali workers can bring an additional mobile phone (two in total) from abroad to Nepal without incurring any extra fees. However, this exemption applies only to workers who have completed a minimum of six months of work abroad.

If the user wants to use a Nepali SIM card on a device brought from abroad, the device will receive an SMS from NTA warning that it is unregistered and requesting that it be registered within 15 days.

“The person needs to upload their citizenship and visa, or any other valid proof, to NTA’s system, and NTA will register the device. This process is done all online and does not require a visit to the NTA office,” says Khanal.

Individuals returning from abroad without a work permit who bring an extra mobile phone are subject to an 18% tax for smartphones and a 15.5% tax for bar phones imposed by the customs department. In cases where a person brings more than two phones, the department states that it reserves the right to confiscate them.

Why MDMS?

Legally imported phones are brought through official channels. In an official channel, devices are imported through the customs office, and players including national authorized dealers, regional distributors, local distributors, and retailers are engaged in the supply chain of the devices.

But in the grey market for phones, all the channels are cut off, and only one individual or retailer takes the phone, evading taxes.

Deepak Malhotra, president of Mobile Phone Importers Association (MPIA), said that in 2021, around Rs. 55 billion worth of mobile phones were imported into Nepal.

Out of that, only around Rs. 38 billion worth of smartphones were imported legally, while smartphones worth around Rs. 17 billion were illegal, implying that 70% are legal whereas 30% are illegal imports.

“30% of mobile phones imported into Nepal in 2021 were brought in illegally.”

— Deepak Malhotra, president of Mobile Phone Importers Association (MPIA)

Malhotra added that on illegal mobile phone imports, the nation loses about 25% of direct (13% VAT + 5% excise duty) and indirect taxes.

To discourage illegal imports of mobile phones, Mobile Device Management System is deployed. It will encourage official imports, generating revenue for the government.

In addition to blocking unofficial mobile devices, the management system will also enable tracking and blocking mobile devices that are lost or stolen.

Sanjay Agarwal, vice-president of the Mobile Phone Importers Association (MPIA), says that the consumer will get genuine phones with a warranty after the government implements this system.

“This will also help all the players engaged in the supply chain of the handset market,” he shares.

The MDMS Bylaws 2018 writes that the objectives of the MDMS are “to ensure national and consumer security, to identify the genuine mobile handsets and make the fake and non-genuine handsets inoperable in Nepal, to enable tracking/blocking of mobile handset that is lost/stolen, to encourage import and sell of genuine mobile handsets and to eradicate grey market.”

How did it start?

NTA started IMEI registration of mobile handsets in 2016 after issuing Interim Directives for Implementation of National EIR System 2072 BS. According to the provision, the importers must register the IMEI numbers in NTA.

However, apart from keeping records of IMEI details of the devices, the telecom authority was unable to take any strict actions against grey phones. NTA therefore planned to develop a system to render the grey phones inoperable.

In 2018, the telecom regulatory authority issued Mobile Device Management System Bylaws, 2075 (2018) to implement the EIR (Equipment Identity Register) system to eradicate the grey market.

In 2019, for the implementation of Mobile Device Management System, NTA selected three international firms: Nuemera (M) Sdn. Bhd., Malaysia; OSI Consulting Pvt. Ltd., India; and Namaste Global Communication Pte. Ltd., Singapore (JV), as MDMS service providers.

The launch of the MDMS system was first postponed due to COVID-19 lockdown. Later, speaking at the 2077/78 BS budget announcement, then Finance Minister Bishnu Prashad Paudel boldly said that MDMS will be implemented from July 16, 2021 (Shrawan 1, 2078).

But because of the NTA’s lack of preparation, the launch of the Rs. 650 million system was repeatedly delayed. After four years of its start, Nepal Telecommunication Authority soft launched it on September 15, 2022.

On December 24, 2022, the NTA announced that the MDMS would be implemented on December 30, 2022. However, following the announcement, Prime Minister Pushpa Kamal Dahal instructed the then Finance Minister Bishnu Poudel to temporarily halt the implementation.

Almost five months later, on May 14, 2023, the NTA made another announcement stating that the MDMS would be implemented from May 15, 2023. This decision came after receiving a notice from the TIA Customs Office, which specified that migrant Nepali workers who have worked abroad for at least six months can bring up to two phones to Nepal without having to pay customs duty.

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How to register IMEI number in MDMS System in Nepal?

NTA says that phones brought from abroad for personal use before September 15, 2022, are automatically registered in MDMS. If you have bought the phone from an authorized distributor, you do not need to register it as the importer would have already done it.

You can check if the mobile phone is registered or not via mdms.nta.gov.np.

If you have legally brought a phone bought in a foreign country with you in Nepal without paying customs duty, you can register it in the MDMS system by following the steps below.

Before moving forward, you need to have scanned copies of your passport/citizenship and a passport page or boarding pass with a departure stamp and arrival stamp from Nepal Immigration.

Furthermore, if you are carrying an additional phone, the NTA has stated that the Customs Office will automatically register it in the MDMS after completing the necessary procedures and paying customs duty. Migrant workers returning to Nepal after working abroad for at least six months should inform the TIA Customs Office, but they are exempt from paying customs duty.

Step 1: Check the IMEI number of your mobile

You must know the IMEI number of your mobile device before processing the registration. IMEI number is an identification number that is on the box of the handset. 

You can also dial *#06# to find out the IMEI and the serial number of the mobile set.

Step 2: Visit the NTA platform

Once, you find out the IMEI number, go to the link NTA platform at mdms.nta.gov.np/individual-registration.

Step 3: Validate IMEI

Under “नेपाली नागरिकहरूलाई निर्देशन”, which is selected by default, fill out the mobile details. The details include IMEI numbers (separate with a comma if more than one), mobile brand, mobile model, and if the mobile phone is currently in use or not.

Step 4: Validate email address

Put your email address and verify it through OTP.

Step 5: Fill out personal information

After email verification, you need to put in your personal information and a mobile number that will be used in Nepal.

Additionally, you need to fill in the address mentioned in the passport and from where and when you arrived in Nepal.

Step 5: Fill in Mobile User Detail

Choose “Self” under Mobile User Detail if you plan to use the phone yourself. If someone else is going to use the phone, provide their information.

Step 6: Upload documents

In this step, the applicant needs to upload scanned copies of related documents such as passport/citizenship and departure stamp and arrival stamp from Nepal Immigration.

Step 7: Wait for the email

Authorities will verify the applications. The applicant will be informed about the acceptance or rejection of the application through his/her email.