Textiles and Steel Face No Overcapacity Allegations as India Rejects USTR Probe Findings

Textiles and Steel Face No Overcapacity Allegations as India Rejects USTR Probe Findings​

Government Defends Indian Manufacturing Against Excess Capacity Claims​

A senior government official has definitively refuted claims of surplus capacity in India's textile and steel sectors. Amitabh Kumar, Director General of Trade Remedies and Additional Secretary in the commerce ministry, stated that the country does not possess overcapacity in these key manufacturing industries.

The statement was made on Wednesday, refuting international allegations regarding structural excess capacity and production within Indian manufacturing sectors. Mr. Kumar emphasized that such claims do not align with current realities or data points provided by India.

He highlighted that a nation's per capita consumption of textile and steel products remains among the lowest globally. This low consumption rate serves as the primary defense against accusations of having excessive domestic capacity.

Low Per Capita Consumption Undermines Overcapacity Allegations​

Mr. Kumar specifically addressed the textile industry, stating that overcapacity is not an issue. He noted that the per capita consumption of various textile products, especially manmade fiber and technical textiles, is "abysmal."

He suggested that India's tropical climate—which typically leads to a preference for cotton wear—contributes to this consumption pattern. This perspective challenges the premise of excessive production in light of consumer habits.

In the steel sector as well, Mr. Kumar maintained that per capita consumption rates are low. While India may rank among the largest producers of steel, he pointed out that when measured against its population and economic growth imperative, the domestic demand is comparatively modest.

Rejection of USTR Probe Allegations​

The remarks come in direct response to a probe initiated by the Office of the United States Trade Representative (USTR). This probe was launched in March under Section 301(b) of the Trade Act of 1974, focusing on structural excess capacity and production across various economies.

India's official submission has strongly rejected these allegations entirely. The government asserted that the USTR notice failed to provide sufficient or cogent rationale or prima facie evidence. This evidence was needed to substantiate the claim that India possesses structural excess capacity leading to a trade surplus with the United States.

Trade Remedies and Global Rules-Based System​

Mr. Kumar underscored the vital role of trade remedy measures in international commerce. He stated that these mechanisms are crucial for addressing unfair trade practices effectively.

The purpose of such remedies, he explained, is to bolster domestic manufacturing capabilities within nations. Furthermore, it is intended to support and strengthen a rules-based trading system globally.

India is currently noted as a net importer when considering manmade fibers, besides cotton, further contextualizing the consumption patterns discussed in the ministry's defense.