NEW DELHI: India has joined the US and 13 other economies in a new initiative to address structural excess capacity in five manufacturing sectors — automobiles and electric vehicles (EVs), batteries, chemicals, foundational semiconductors and solar panels. The initiative commits the signatories to cooperate on identifying and tackling production imbalances that they say distort global markets and undermine competition.
The joint ministerial statement was signed on Wednesday in Washington on the sidelines of the Organisation for Economic Co-operation and Development (OECD) Trade Committee meeting, where the Office of the US Trade Representative (USTR) convened senior officials to initiate the process, according to a USTR release.
Besides India and the US, the signatories are Argentina, Australia, Canada, the European Union, France, Germany, Italy, Japan, South Korea, Mexico, Poland, Türkiye and the United Kingdom.
The group will establish dedicated sectoral platforms to examine excess capacity and identify corrective measures in the five sectors. The signatories have committed to meeting at the technical level before December 2026 to draft terms of reference, exchange non-confidential data on excess capacity and its effects, and identify information gaps, drawing on existing OECD work. Other countries, both within and outside the OECD, have been invited to join.
The statement does not name any country. It defines structural excess capacity as production that persistently exceeds global demand, would not exist under market conditions, and is created or sustained by government policies or interventions. It calls on countries to end “non-market policies and practices” that distort markets.
According to the signatories, excess capacity distorts prices, deters new entrants, weakens innovation and competition, and increases trading partners’ dependence on a single country's products. Such dependence, they said, can heighten exposure to “economic coercion, including arbitrary export restrictions”.
The statement notes that a growing number of countries are already taking individual measures to protect their domestic industries. It argues that these efforts would be more effective if countries cooperated, shared information and coordinated complementary action.
The initiative builds on discussions at the G20 Trade Ministerial meeting in Milwaukee, Wisconsin, on September 30 and October 1, held under the US presidency of the G20. The statement traces international concerns over excess capacity to 2016, when G20 trade ministers meeting in Shanghai raised the issue, leading to the creation of the Global Forum on Steel Excess Capacity. At the Hangzhou Summit later that year, G20 leaders acknowledged that government subsidies could contribute to global excess capacity. The signatories said the problem had worsened despite those commitments.
“Left unchecked, these issues will continue to cripple domestic industries, displace local production, and hinder our ability to raise the standard of living for workers and their families,” US Trade Representative Jamieson Greer said.
India's participation assumes significance as it seeks to expand domestic manufacturing through production-linked incentive (PLI) schemes covering sectors such as solar modules, advanced chemistry cell batteries, EVs and semiconductors.
However, the initiative could also raise questions about how excess capacity is defined and whether the framework could be used to challenge industrial policies that support domestic manufacturing.
The Global Trade Research Initiative (GTRI), a New Delhi-based think tank, said India must ensure that the cooperation safeguards its manufacturing interests rather than giving Washington greater legitimacy to challenge India's industrial expansion.
GTRI founder Ajay Srivastava said signing the declaration should not be interpreted as India accepting the US position on Indian manufacturing.