Goyal Rejects Claims of India's Excess Manufacturing Capacity

Commerce and Industry Minister Piyush Goyal has stated that India does not possess structural excess manufacturing capacity in the sectors identified by the G20 Presidency. He affirmed that the country's manufacturing capabilities are designed to meet both domestic and global demands. These remarks were made during his participation in the concluding day of the G20 Trade Ministers' Meeting in Milwaukee, Wisconsin, where the US will hold the G20 Presidency in 2026.

Goyal emphasized that while industrial capacity itself is not the core issue, distortions can arise from geographical concentrations of production driven by hidden subsidies and support. He added that diversifying production and supply chains is a legitimate goal, but it should not be used as an excuse for measures that violate World Trade Organisation (WTO) rules or shift the burden of adjustment onto developing countries, which require policy space for industrialization. India shares the concern of several G20 members regarding trade-distorting support leading to dumping and predatory pricing, addressing such practices through evidence-based WTO measures, including anti-dumping and countervailing duties.

His comments are particularly relevant following the Office of the United States Trade Representative (USTR) launching two Section 301 investigations on March 11 and 12, targeting 60 economies over concerns related to forced labor and excess industrial capacity. One probe, focusing on forced labor, concluded with a 10 percent duty imposed on countries, including India, while findings for the excess capacity probe are still pending. The US has specifically flagged excess capacity issues in numerous sectors, including steel, textiles, aluminium, automobiles, batteries, cement, chemicals, electronics, energy goods, glass, machine tools, machinery, non-ferrous metals, paper, plastics, processed food and beverages, robotics, satellites, semiconductors, ships, solar modules, and transportation equipment.

India, as the world's fastest-growing large economy, boasts a domestic-demand-driven economy serving 1.4 billion people. The country is actively building manufacturing value chains, from design to finished goods, establishing itself as a trusted link in global supply chains. During the G20 meeting, Goyal spoke in sessions on structural excess capacity and production, updating the Most-Favoured-Nation principle, and ending forced labor. He reiterated India's absolute and unconditional commitment to eliminating forced labor, stressing that border measures must be based on specific, verifiable evidence rather than presumptions and must respect due process and WTO rules. He also called for the restoration of the two-tier dispute settlement system and the preservation of special and differential treatment for developing countries.

What to watch: Future developments in USTR's excess capacity probe and WTO discussions on trade-distorting subsidies.

Editor's note: The draft provides a comprehensive summary of the minister's statements and the context of the US trade investigations. It captures the essence of the source material well.