Whether the apparel sector benefits from GST depends on the tax slab it comes under. The Tirupur knitwear cluster feels apparels are essentials and so should attract a lower rate slab considering that the cumulative tax on textile products, including the non-availability of input tax credit on the inter-state purchase of cotton and other raw materials, presently comes to only around 7 to 8 per cent.

The view is that any classification in the slab above the lower rate can only make knitwear products from the cluster not getting much out of the GST regime except from the logistical point of view. If the revenue neutral rate is fixed at around 15 to 15.5 per cent, the lower rate slab would probably be around 12 per cent. The Tirupur knitwear cluster is predominantly a micro, small and medium enterprises hub.

GST is expected to transform India into a common market, eliminate inefficient tax cascading and go a long way in boosting the manufacturing sector. Simply halving the delays due to road blocks, tolls and other stoppages could cut freight times by 20 to 30 per cent and logistics costs by an even higher 30 to 40 per cent. This can probably boost the competitiveness of India’s key manufacturing sectors by 3 to 4 per cent of net sales. However, branded apparels may get costlier with GST.