India's garment exports could be hit by China's recent devaluation of the yuan. In fact, Vietnam one of India’s major rivals, has also devalued her currency by one per cent. China devalued yuan by four per cent, to boost exports. India’s garment exporters want the three per cent interest subvention on rupee export credit to be reintroduced with retrospective effect from April 1, 2015. They feel, garment exports will grow if India were to expedite free trade agreements with the EU, Canada and Australia. Right now, knitwear exports from India to EU have a 42.25 per cent share in total exports.

Vietnam has emerged a major competitor to Indian garment exports. Vietnam exported about $28 billion worth of garments in 2014-15 (against $16.82 billion by India) and out of this $4 billion worth of garments was destined for the European Union. Vietnam’s exports to Canada are double India’s exports to Canada. In another two years, Vietnam will enjoy the benefits of free trade agreements with the EU and the US. Exporters hope there is no drastic changes in forex rate. The industry hopes GST comes into effect from April 1, 2015.