Will Cash Margins curtail imports at the cost of digitisation?

Those at the helm of the country's administration have newfound admiration for the telecommunication and the IT sector. In almost every address to the public on the revival of the economy, praises for the sector are part of the agenda and emphasizing on its potential is a recurring theme. Further, proactive policy making like in the case of Digital Pakistan Policy, Cloud First Policy and Draft Broadband Policy makes one believe that probably the government is willing to see this transition through.  

However, the ground reality is completely different. The Telecommunications sector has seen a chain of events starting from the government tracking back on its promise of reduced withholding tax to the latest implementation of 100 percent cash margin on equipment imports of the sector. 

The measure comes as an attempt to curb current account deficit through discouraging imports. However, it fails to distinguish between consumption based imports and equipment imports that are part of a collective effort to develop the country’s infrastructure, specially in the case of IT and Telecommunication sector.