India Rejects US Overcapacity Claims on Textile and Steel Sectors
By jayesh chouhan 2026-06-11 12:27:32
India Rejects Allegations of Overcapacity in Textile and Steel Sectors During US 'Section 301' Probe
India has dismissed allegations raised during the US Trade Representative's (USTR) 'Section 301' investigation, which claimed that the country's textile and steel sectors possess excessive production capacity (overcapacity).
According to Reuters, Additional Secretary (Trade) Amitabh Kumar stated on Wednesday that the production capacity of these industries in India aligns with domestic demand and must be viewed in the context of the country's large population and growing consumption needs. He noted that, on a per capita basis, India's production and consumption levels remain significantly lower than those of many developed economies.
In its investigation, the US has raised the issue of alleged structural overcapacity in key Indian sectors such as solar equipment, petrochemicals, steel, and textiles. Additionally, India's trade surplus of approximately $42 billion with the US has been highlighted.
Meanwhile, the Textile Export Promotion Council (TEXPROCIL) has also submitted a detailed response to the USTR, contesting the US claims. The industry body asserts that production figures for the cotton, yarn, and fabric segments do not indicate any unusual capacity expansion. On the contrary, production in several areas has remained stagnant or declined, undermining allegations of structural oversupply.
The Ministry of Commerce has also presented the case for the affected industries, rejecting allegations regarding overcapacity and the use of forced labor in the Indian cotton textile sector.
It is worth noting that the USTR investigation was initiated to assess whether various countries are creating manufacturing advantages—through subsidies, labor costs, or other policy measures—that could lead to imbalances in global trade. Beyond textiles and steel, the scope of the investigation includes petrochemicals, health products, and the automotive sector.
