Rejecting US allegations of excess manufacturing capacity, the Directorate General of Trade Remedies (DGTR) on Wednesday asserted that India does not suffer from overcapacity and that production in sectors such as steel and textiles is primarily geared towards meeting growing domestic demand rather than generating export surpluses.
Speaking on the issue, DGTR Director General and Additional Secretary in the Commerce Ministry, Amitabh Kumar, said allegations of overcapacity and trade-distorting subsidies against India do not hold ground, as the country neither possesses significant surplus manufacturing capacity in these sectors nor provides export-linked subsidies that could lead to dumping of goods in overseas markets.
"We generally do not provide subsidies. They, of course, challenge several of our schemes," Kumar said, adding that India does not offer direct subsidies to manufacturers that would artificially enhance their competitiveness in global markets.
Kumar's remarks come against the backdrop of an investigation launched by the Office of the United States Trade Representative (USTR) under Section 301 of the US Trade Act of 1974. Initiated in March, the probe is examining whether trade and industrial policies in countries, including India, contribute to excess domestic capacity that may result in dumping in the US market. The USTR has identified sectors such as steel, textiles, petrochemicals, solar equipment, automobiles and healthcare products as part of its review.
Rejecting the premise of overcapacity, Kumar said India's production levels must be viewed in the context of its large population and expanding domestic market. He noted that manufacturing output is often aimed at meeting rising domestic demand rather than creating excess capacity for exports.
"There is no overcapacity in India, compared to our population, compared to our economic imperative," Kumar said.
He argued that per capita consumption of steel and textile products in India remains substantially lower than in many advanced economies, suggesting that current production levels are broadly aligned with domestic requirements.
According to Kumar, India's manufacturing sector is calibrated to serve local consumption needs and not to generate excess volumes for overseas markets.
His comments come at a time when India and the US are negotiating a Bilateral Trade Agreement (BTA). However, the USTR's Section 301 investigation is being conducted independently to assess whether India maintains policies that create manufacturing advantages and contribute to structural excess capacity.