As alleged in the US Trade Representative’s Section 301 investigation, India does not have surplus manufacturing capacity in textiles, a senior Indian government officer said.
Along with the surplus production in various industrial sectors including textiles, the US has cited the 2025 goods trade surplus of $42 billion in favour of India with the US.
India’s additional trade secretary, Amitabh Kumar said India’s textile and steel output should be assessed against the size of its population, domestic demand and growth needs, rather than in terms of absolute production.
“Overcapacity is a country’s perspective. We don’t think we have overcapacity in anything,” Kumar said.
“India’s consumption of textile products per person was very low, he added, particularly of man-made fibre and technical textiles items. This country has a hot and tropical climate. We wear cotton. How do we have overcapacity,” Reuters quoted him as saying.
The USTR is also considering a separate tariff on India, alleging excess capacity in sectors such as textiles and saying exports are hurting the US industry.
Kumar said the move appeared aimed at a “particular country while also serving other trade-related aims”.
Trade analysts say the US is using the threat of Section 301 tariffs over alleged overcapacity and forced labour to press India to open its markets for agricultural and other products, as well as buy more US energy and defense products.
The office of the USTR launched investigations in March against India among 16 countries over policies such as subsidies, state financing and industrial planning that let factories keep producing even when not supported by market conditions.
This month the US proposed an additional tariff of 12.5% on imports from India and other countries, citing use of forced labour, though India has said these are not final.
Image courtesy: IndiaMart
