KARACHI: In the absence of adequate business-friendly environment, the upcoming package of Rs 75 billion for six export oriented sectors would not ensure full scale recovery of the export oriented industry, said analysts. According to the news reports, Prime Minister Nawaz Sharif is likely to announce an incentive package for five or six export-oriented sectors to the tune of Rs 65 -75 billion of which textile sector would be the top beneficiary. “The package could go some way in making the textile sector competitive internationally but core issues like uncompetitive exchange rate, higher electricity/gas prices, poor power supply, out dated technology, undiversified product base and low cotton quality will continue to hamper a full scale recovery of the sector”, said Zeeshan Azhar, an analyst at Foundation Securities. The said incentives would add to the incentives long in place since the effect of Textile Policy FY14-19 and the FY17 budget. Currently, rebate on local tax varies between 1-4 percent of Free on board (FOB) value on 10 percent incremental exports over last year. This rebate could go up to 3-8 percent of FOB value. The new tax rebate could be on 10 percent incremental exports or be extended to full FOB value. The impact on companies’ bottom line would be muted in the former case but sizable in the latter, added Azhar. The government believes the package is necessary to encourage exporters who are struggling due to lower demand from major export markets, stable US Dollar-Pakistani Rupee parity, and incentive package announced by competitors like India, Bangladesh and Vietnam. He added that the downward trajectory in textile exports has shown some respite over the last 2 months but our prognosis of the sector remains weak. The scope and impact of the upcoming textile package is still to be seen. The initial blueprint as indicated by news flows reveals that the government would refund 3/4/6/8 percent taxes on yarn & grey fabric/processed fabric/home textile & knitwear/garments respectively, provide freight subsidy to exporters, remove regulatory duty and customs duty on key export oriented industrial inputs including raw materials, remove import duty and sales tax on industrial machinery, and simplify duty rebate, bond and export refinance schemes to facilitate Small Medium Enterprises (SME) exporters. “These measures are aimed at reducing the exporters cost of doing business, making them more competitive in the international marketplace and technological revival of the industry”.