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Tirupur’s RMG units face tough times with GST and export slump

Depression has gripped the knitwear export cluster in Tirupur following a significant decline in exports, in terms of value, in October. Approximately 8,500 units are engaged in manufacturing of textile products and garments in the knitwear hub, apart from a large number of job-working units, the vast majority of them run by households.

And here lies the crunch. Experts say it is the job-working units that see the sword of Damocles hanging by a thread over their head and they may have to close shop as they are unregistered units. These units do not have an industrial licence nor any relevant qualifications to be registered under the new tax regime as they are in the unorganised sector, reveals an exporter.

In the last two months, some workers who turned-entrepreneurs have decided to re-join the workforce just to make ends meet, while others are in the playing the waiting game hoping that things will return to normal. Raja M Shanmugham, President, Tirupur Exporters’ Association reveals, the garment sector has reached its endurance limit. Any delay in government intervention in handholding the sector by way of reinstating the old duty drawback structure and restoring the remission of State levies under RoSL (Rebate of State Levies) would drive them out of business.

Data records readymade garment exports from the country have dramatically dropped, registering a negative growth from June 2017 as against the year ago period. It peaked at a negative growth of 41 per cent in rupee terms in October, registering a turnover of 5,398 crore as against 9,110.75 crore in October 2016. Exporters feel this situation can be avoided if the government extends a line of support as in the past. On the flip side, while there is gloom on the export front, the domestic market is showing signs of a revival.