Tirupur apparel exporters fear the GST rates set for different segments of the knitwear production chain can create complexities and erode profit margins.

The differing GST scales fixed for various processes in the apparel production chain can have ramifications considering that the production chain in the Tirupur cluster remains mostly fragmented.

Complexity will arise as job work is going to be taxed at 18 per cent even though garments attract only five per cent. In Tirupur, processes like dyeing, knitting, fabrication and printing among many others are being carried out as job works.

GST says nothing about the duty drawback scheme. Exporters say unless the duty drawback rates are made clear, the profit margins can shrink. It is because the central excise and the service tax components in the drawback are going to get integrated with the GST and only the customs duty component that comes to just over two per cent will be outside the GST purview.

Exporters say the 18 per cent GST rate on manmade fiber and synthetic yarn would have an inverted duty structure problem as the fabric was under the five per cent rate. The high rates for manmade fiber and yarn would lead to an increase in input costs and adversely affect the synthetic sector.