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Trade deficit is not crisis, it’s investment in growth | The Express Tribune
Rising imports of industrial inputs signal economic revival, not decline, as Pakistan embarks on tariff reform
ISLAMABAD:
Each month, when the Pakistan Bureau of Statistics (PBS) releases its trade figures, one number grabs headlines: the trade deficit or the gap between imports and exports. The latest data, showing a 38% increase in the first four months of the fiscal year, was no exception. Predictably, critics of trade reform were quick to argue that Pakistan’s import liberalisation is driving the country towards economic ruin.
Some even call the tariff reform a “suicide mission.” Their solution is predictable: return to the old playbook of regulatory and additional duties. But this strategy has been tried repeatedly over the last 17 years, and each time it worsened the very problems it aimed to solve, leading to stagnant growth, deeper poverty, and declining exports.
What this debate often ignores is a simple question: what kinds of imports are rising? About 85% of Pakistan’s imports consist of petroleum, chemicals, machinery, textile industry raw materials, metals, and essential food products such as edible oils, tea, and lentils. These are not luxury items; they are critical inputs for production, energy, and food security. Rising imports of this kind suggest that industries are reviving and consumer demand is strengthening, both signs of economic activity.
Despite the widening trade gap, the deficit has not drained foreign exchange reserves or worsened the current account. Even with recent loan repayments of $400 million, Pakistan’s foreign exchange reserves remain stable at around $14.5 billion. If imports are building productive capacity, the resulting trade deficit becomes an investment in future growth. As industries modernise and productivity improves, exports catch up, just as they have in nearly every fast-developing economy.
Some critics question why exports have not risen despite tariff cuts. But the reform process only began in July 2025. Until the last fiscal year, Pakistan was still raising tariffs. In July 2024, regulatory duties were increased on over 600 items and additional customs duties on more than 2,000. The current tariff rationalisation plan spans five years, aimed at correcting 17 years of flawed policy. Expecting exports to surge within months is unrealistic – structural reforms take time to bear fruit.
Economic history supports this view, and India’s experience offers a striking example. When the country began liberalising in 1992, its imports and exports were nearly balanced at around $20 billion, with a $2 billion trade deficit. By 2024, its merchandise imports had risen to approximately $720 billion, while exports grew to $437 billion, resulting in a $283 billion trade deficit – with China accounting for half. Yet no one accuses Manmohan Singh of steering India towards economic “suicide.” On the contrary, he is praised for revitalising India’s economy after decades of stagnation.
Pakistan’s own experience is equally telling. As the economy opened in the 1990s and accelerated around 2000, both imports and exports grew rapidly. Imports of telecom equipment, machinery, and industrial materials built the foundation for modern services and infrastructure. The trade deficit widened, but instead of staying the course, Pakistan reversed reforms after 2008, slowing growth and weakening competitiveness. The result has been prolonged stagnation.
Another major argument against tariff reform has been the fear of revenue loss. Yet the numbers tell a different story. The Pakistan Institute of Development Economics (PIDE) had long projected gains instead of only minimal losses, and they were right. In the first quarter of this fiscal year, customs duty collections rose by 13%, exceeding targets even after duty cuts.
It may be too soon for firm conclusions, but both past experience and current trends suggest that lower tariffs are encouraging legal imports and improving compliance, not eroding revenue.
Pakistan now stands at a crossroads. It can continue to oscillate between protectionist fear and half-hearted reforms, or it can follow the path of countries that embraced openness to accelerate growth. Pakistan is no longer a bystander in global affairs. It is now positioned at the intersection of shifting geopolitical and economic currents.
To seize this moment, Pakistan must lower trade barriers and open its economy to investment and integration with regional and global markets. Opportunities of this scale are rare – if Pakistan lets this one pass, it may not get another for a generation.
To sum up, a trade deficit driven by productive imports is not a loss; it is an investment in the future. As global trade patterns shift and smaller economies integrate with larger blocs, Pakistan must not be left behind. For too long, powerful lobbies have distorted the tariff system through SROs and exemptions, protecting inefficiency at the cost of progress. It is time to level the field, resist rent-seeking pressures, and stay the course on reform. Pakistan’s path to prosperity lies not in retreat or isolation, but in embracing openness and claiming its rightful place in regional and global value chains.
THE WRITER IS A MEMBER OF THE STEERING COMMITTEE OVERSEEING THE IMPLEMENTATION OF THE NATIONAL TARIFF POLICY 202530. HE HAS PREVIOUSLY SERVED AS PAKISTAN’S AMBASSADOR TO THE WTO
Business
New Income Tax rules from 1 April 2026: 50% HRA exemption for Salaried employees in THESE cities may soon be a reality
New Delhi: Good news for salaried employees who are likely to benefit from a higher income tax exemption as the draft Income Tax Rules 2026 propose a major change in House Rent Allowance (HRA) deductions. If approved by Parliament, these changes may apply from April 1, 2026.
According to the draft Income-tax Rules, 2026, the government is proposing to expand the scope of higher HRA tax exemption under the old income-tax regime by extending it to more cities. The proposal aims to align tax relief with increased rental prices in rapidly expanding cities and evolving job trends.
New Income Tax: What is the proposed change?
Currently, salaried employees in Mumbai, Delhi, Kolkata and Chennai can claim an HRA tax exemption of up to 50 percent of their salary while those living in other cities can only claim an exemption of 40 percent. Under the draft rules, cities of Bengaluru, Hyderabad, Pune and Ahmedabad are proposed to be added to the 50 percent category.
New Income Tax: How will the exemption be determined?
According to the proposal, the method for computing HRA relief will remain the same. The exemption will be determined as the lowest of three figures which is the actual allowance received, the excess of rent paid over 10 percent of pay or a prescribed portion of salary linked to the employee’s city of residence.
New Income Tax: Why HRA matters?
HRA is a portion of an employee’s salary that an employer contributes to help cover house rent. Under the old tax regime, some part of HRA is not taxed which enables employees to save tax. HRA tax benefit is available only in the old tax regime and not in the new one. Even though the newer framework offers lower slab rates, only those employees who opt for the old system are eligible for the HRA exemption.
New Income Tax: What has govt proposed the changes?
The government has proposed the changes to update HRA norms in response to India’s changing economic landscape. In recent times, cities including Bengaluru, Hyderabad and Pune have drawn in a sizeable salaried population. The proposal also aims to align tax relief with higher rental prices in these rapidly expanding cities.
The final regulations will be forwarded to Parliament following assessment. If approved, these changes will apply from April 1, 2026.
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Yotta Data Services to spend $2 billion to deploy Nvidia’s latest Blackwell chips in India, building one of Asia’s largest AI superclusters
Yotta Infrastructure’s Greater Noida data centre park (Photo Credit: Yotta’s website)
India’s data centre sector is entering a new era of scale. Yotta Data Services said Wednesday, February 18, that it will deploy Nvidia’s most-advanced artificial intelligence chips in a $2-billion project that will establish one of the largest AI computing hubs in Asia, positioning the country as a serious contender in the global race for AI infrastructure.
The investment centres on the first-ever deployment of Nvidia’s Blackwell B300 graphics processing units in India, to be housed at Yotta’s hyperscale campus in Noida, just outside New Delhi. The supercluster is expected to go live by August.
Anchoring the project is a four-year agreement with Nvidia valued at roughly $1 billion, under which the chipmaker will establish one of Asia-Pacific’s largest DGX Cloud clusters within Yotta’s infrastructure. Sunil Gupta, managing director and chief executive of Yotta, told The Economic Times that Nvidia will deploy approximately 10,300 GPUs through the arrangement to serve its global Asia-Pacific customers and run its own models and services. “Nvidia is creating one of Asia’s largest DGX Cloud clusters on our supercluster,” Gupta said.
The deal underscores a broader shift in how hyperscalers and chipmakers are approaching India. Global cloud providers, including Microsoft and Amazon, have been expanding AI data centre capacity in the country, drawn by surging demand for generative AI services and government pressure to localise advanced computing infrastructure, according to Reuters. Nvidia’s direct commitment within Yotta’s facility goes a step further, signalling confidence in India as a viable hub for serving enterprise AI workloads across the region.
A significant share of remaining capacity will be dedicated to India’s national AI Mission, which has received more than 500 applications from start-ups seeking affordable compute access. Gupta told The Economic Times that the expansion will increase the country’s compute capacity “by almost five to six times”, addressing what he described as enormous pressure on existing resources. The infrastructure will support state-backed Indian language model initiatives, including Bhashini, Sarvam, BharatGen and Soket, all aimed at building foundational AI models trained on Indian-language datasets.
Yotta currently holds around 10,000 advanced Nvidia GPUs, accounting for nearly 75% of India’s GPU compute capacity. With the new deployment, its total GPU count will rise from roughly 40,000 to more than 75,000 over the next two years.
The capital push is being funded through a combination of debt and equity. Speaking to CNBC-TV18, Gupta said the company is targeting a fundraise of close to $1 billion to support its current phase of GPU deployment. Yotta has already invested over $1.5 billion in infrastructure and expects to commit an additional $2 billion toward advanced chips. A pre-IPO equity round is underway, with the company aiming to enter public markets within the current financial year.
Yotta is part of Indian billionaire Niranjan Hiranandani’s real estate conglomerate and operates data centre campuses in Mumbai, Gujarat and near New Delhi. Additional capacity from its Mumbai facility will supplement the Noida supercluster.
The timing of the investment is notable. US export controls have reshaped global supply chains for advanced AI semiconductors, pushing technology firms to deepen partnerships in markets that remain accessible. India, which has cultivated strong ties with Washington and positioned itself as a neutral beneficiary of great-power competition in technology, has emerged as one of the cleaner plays for companies looking to expand AI compute outside China.
Speaking to CNBC-TV18, Gupta said that India’s AI ambitions are grounded in practical outcomes, with the goal of delivering impact across agriculture, healthcare, education and climate. He drew a comparison to the Unified Payments Interface, suggesting AI-led transformation could similarly reshape how services are delivered at scale across the country.
For Nvidia, the DGX Cloud anchor at Yotta is the latest in a string of sovereign and commercial AI infrastructure deals across Asia, as the company works to deepen its footprint ahead of any potential tightening of chip export restrictions.
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February 18, 2026, 11:30 IST
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Stock market today: Nifty50 opens near 25,700; BSE Sensex flat in trade – The Times of India
Stock market today: Indian equity benchmarks opened flat in trade on Wednesday. While the 50-share index Nifty was near 25,700, the 30-share BSE Sensex was down marginally. At 9:16 AM, Nifty50 was trading at 25,716.35, down 9 points or 0.035%. BSE Sensex was at 83,438.94, down 12 points or 0.014%.Experts believe that the stock market is likely to remain steady with a positive undertone in the near term, supported by global trends.Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited says, “The better-than-expected Q3 results and indications of continuing momentum in earnings growth, going forward, are positive factors that will keep the market resilient. The volatility in IT stocks may continue, in response to incoming news relating to the sector. Overall, IT stocks may remain weak since uncertainty surrounding the sector is huge and large institutional investors are unlikely to invest big time in IT stocks, unless valuations become compelling. There can be churns away from IT towards other sectors like banking and financials, automobiles, telecom, pharmaceuticals etc where there is good earnings visibility.”“This is the time to gradually increase exposure to equity. But many retail investors are increasing investments in gold and silver ETFs, which is a risky game in the present context. Early signs of a shift in the investment strategy of FIIs are visible now. In the cash market, FIIs have been buyers in eight out of the last thirteen trading days. This trend and improving prospects for corporate earnings bode well for the market.“US equities ended marginally higher after a weak start to the session, helped by a rebound in technology stocks and support from financial shares. The recovery followed earlier volatility as investors assessed the outlook for artificial intelligence after recent turbulence that had pulled major indices away from record levels.Asian markets also posted modest gains in thin holiday trading. Investor sentiment remained cautious as markets continued to digest recent swings in global equities linked to concerns around AI-driven disruptions.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
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