Readymade garment exports from Tirupur dropped by 3.84 per cent in August. The threat of losing drawback to the tune of five or six per cent has prevented exporters from confirming orders. If the trend continues, India’s share in global readymade garment exports is expected to come down to 3.5 per cent this year and to three per cent next year.

There is also an apprehension that all benefits to exporters will cease from January 1 since the country has agreed to the WTO declaration that no incentive would be given to a country whose per capita income reaches 1,000 dollars for three consecutive years. The country has reached that status already.

The provision that does not allow the refund of accumulated input tax credit at the fabric stage (with five per cent GST at the fabric stage and its related job works) has had a huge impact on processed fabrics, especially cotton fabrics, as the dyes, chemicals, and ETP chemicals are expensive and attract 18 per cent GST. More than 80 per cent of textile manufacturing units are highly fragmented and predominantly undertake job work. The inverted duty is expected to have a major impact on the cost of production, inflation, and export competitiveness.