The Rebate of State Levies (ROSL) and duty drawback have been restored to pre-GST levels. Duty drawback which was introduced to boost exports stood at 7.7 per cent before GST was introduced. ROSL was introduced in March and was fixed at 3.9 per cent. But soon after the introduction of GST, they were reduced to 2.2 per cent and 0.39 per cent respectively.

But then they were brought back to their earlier levels and are likely to remain so for the next three months. This was because of pressure from the knitwear industry, which felt the country had already lost its international market share in knitwear exports and would definitely lose its competitiveness with other countries like Bangladesh and Sri Lanka.

Unlike the non-GST regime, exporters will be getting a refund of three to 3.5 per cent on excise duty and service tax. Still there will be deficit to the loss of incentives created by the reduction in the rate of drawback and ROSL.

Meanwhile the knitwear industry in Tirupur is eager for a free trade agreement with the European Union and the US. Sri Lanka has a free trade agreement for readymade garments with the EU, so buyers in Europe do not need to pay import duties for goods imported from the island nation.