Three months after GST was implemented, exporters in Gujarat are facing working capital issues due to delayed refunds of integrated GST (IGST). Under GST, exporters must pay IGST and claim refunds for tax paid on exported goods and services; or they can export goods and services by furnishing a detailed bond or letter of undertaking before each export, without paying IGST and then claim refund of input tax credit.

With no GST refunds for two months, merchant exporters are facing a major working capital crunch. Due to this exports are likely to be down by five or ten per cent in the immediate future. If refund inflows are not available, there may be losses. Order books - especially of merchant exporters- have taken a hit.

Liability on processing refunds for industries across the country is Rs 65,000 crores. Small exporters are facing cash flow issues and in the long run, it will reduce competitiveness. Major exports from Gujarat are: textiles, chemicals, pharmaceuticals, ceramics and gems and jewelry. Merchant exporters in the pharma industry are facing an estimated 50 to 60 per cent working capital crunch. The ceramics industry business has declined significantly. Business is down by more than 50 per cent. As most merchant exporters operate on margins of around 10 to 12 per cent, it becomes difficult to fulfil orders.