Hi I have a feature class containing two features in a polygon; one feature inside the other. I want to subtract smaller feature from the larger so that I am left with the boundary of the larger feature without the smaller one.
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Have a look at the DonutBuilder transformer
Depending on how I interpret your question, you may also want to consider the Dissolver transformer.
I would think the Clipper is the transformer to use here. The smaller polygon is the Clipper feature, the larger polygon is the Clippee. It will do a cookie cutter operation to remove the smaller polygon from the larger.
There is an example online here: https://knowledge.safe.com/articles/28774/generating-polygon-differences.html
It's part of our FME and GIS Operations tutorial, and there are other parts of that which you might find useful. The starting page is here: https://knowledge.safe.com/articles/27998/tutorial-common-gis-operations.html