Nearly three months after the implementation of GST, industries are still awaiting clarity on refunds for Integrated GST (IGST) and area-based exemptions under the new tax regime, it was widely felt at a CII seminar on GST impact.

Exporters are facing a challenge in getting refunds for IGST, which has caused a liquidity crunch. Though a separate committee has been constituted to deal with their issues, export-dependent industries are feeling the heat.

Speaking at the seminar, VV Parasuram, Global Head - R&D Operations, Dr Reddy’s Laboratories, said around ₹65,000 crore is stuck, as the refund mechanism under GST rule is yet to gain pace.

For the pharma sector, where 85 per cent of the turnover comes from exports, it has a direct impact on the working capital, he said. “When so much amount of money is stuck, it means that we do not have enough working capital. It affects our business.”

D Venkatesh, Vice-Chairman, CII-Tirupur District, agreed. The Tirupur belt has over 2,700 exporters and garment manufacturers employing over 10,000 people. The area has an export turnover of ₹27,000 crore and domestic turnover of ₹10,000 crore. “All these exporters are severely affected due to stalled refunds. If there are not enough funds, they will be unable to keep up with the competition,” he added.

Another area of concern was area-based exemption available to companies with operations in hilly areas like Uttarakhand.

K Ram Kumar, Senior Vice-President, Ashok Leyland, said there is not much clarity on the benefits the area-based exemption under GST regime. “We have invested around ₹2,000 crore in Uttarakhand. Following us, our ancillary partners set up operations too,” he said. Unless there are clear benefits in setting up operations there, nobody would do it, he pointed out. “Lack of clarity on such issues create uncertainties among business enterprises.”