GST may necessitate a significant tweaking of the duty drawback schemes that have helped Indian exports compete in an increasingly adverse global market. The major concern of the textile exports industry is what would happen to the various drawback benefits, and particularly how the refund mechanism would play out. Today the industry is surviving because of drawbacks.

To illustrate, the recently launched policy of refunding state levies to exporters called Remission of State Levies can't exist in the new tax regime as there would be no state taxes. If the duty drawback policy is not tweaked to accommodate GST, the textile industry is set to lose close to Rs 1,500 crores in refunds.

The Remission of State Levies scheme is being studied to make it compatible with the GST regime. It will probably undergo some changes because value added tax is being subsumed under GST. Exporters had been getting duty drawback on the central levies imposed during the process of manufacturing of goods for exports. And, beginning December, they started to get reimbursement of state levies as well.

While there would be input tax credits under GST, there are many costs which were being taken care of under the various duty drawback schemes. There are many hidden costs as well. Unless they are addressed under GST, India would lose out to neighboring countries, particularly while exporting to the European Union.