India Joins US-Led Initiative on Excess Manufacturing Capacity Amid Section 301 Probe

15-country grouping targets market distortions across key industries as experts urge India to safeguard domestic manufacturing interests

India Joins 15-Country Initiative on Manufacturing Capacity

India was among 14 economies that joined the United States in signing a Joint Ministerial Statement on October 7, following discussions at the G20 Trade Ministers’ meeting held in Milwaukee on September 30–October 1.

The grouping aims to address structural excess manufacturing capacity and market distortions associated with non-market policies and practices. Other signatories include the European Union, Japan, South Korea, Mexico, Argentina, Australia, Canada, France, Germany, Poland, Türkiye and the United Kingdom.

India, the European Union, Japan, South Korea and Mexico are also among the economies covered by the US Section 301 investigation into structural excess capacity.

The joint statement called on countries to end non-market policies and practices that distort markets and contribute to structural excess capacity.

“We note that in the absence of such steps, an increasing number of countries are taking action to defend their industries, workers, and economies from distortions resulting from such policies and practices…such individual efforts will be more effective if concerned countries cooperate, share information, and take complementary action, wherever possible,” the statement highlighted.

Automobiles, Batteries and Semiconductors Among Priority Sectors

The initiative will initially focus on automobiles and electric vehicles, batteries, chemicals, foundational semiconductors and solar panels.

According to the joint statement, participating countries will establish dedicated sectoral platforms to exchange information and explore complementary measures. These efforts will focus on assessing and addressing the effects of excess manufacturing capacity on domestic industries, workers and supply chains.

Experts Raise Concerns Over India's Manufacturing Priorities

Trade policy think tank Global Trade Research Initiative (GTRI) said India's participation means joining Washington in addressing the same issue that is under scrutiny in its own manufacturing sector. The United States launched its Section 301 investigation into structural excess capacity across 16 economies in March.

GTRI founder Ajay Srivastava questioned the consistency of the initiative, stating that participating economies were coordinating against market distortions without challenging the US over its own trade-rule violations during the past two years.

“The initiative also exposes a question of consistency: participating economies are coordinating against market distortions without confronting the US over its own trade-rule violations during the past two years,” GTRI founder Ajay Srivastava said.

Srivastava added that India must assess whether participation will help protect domestic manufacturing or strengthen Washington's position in challenging India's industrial expansion.

For India, the test is whether this cooperation protects domestic manufacturing or gives Washington greater legitimacy to challenge India’s industrial expansion, he added. “Signing the declaration should not amount to accepting the case against Indian manufacturing,” he said.

US Trade Representative Explains Initiative's Objectives

US Trade Representative Jamieson Greer said on Wednesday that the initiative was intended to address production levels that persistently exceeded global demand and were sustained by government policies and interventions.

“Over the course of the US G20 presidency, numerous economies raised instances of structural excess capacity and production in economies that persistently exceeded global demand and were sustained by foreign government’s non-market policies and practices..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,” he said.

No Tariffs or Quotas Announced

The initiative has not yet announced any specific tariffs, quotas or other trade restrictions.

Senior officials have begun work on the initiative and are expected to hold technical-level meetings before December. The discussions will focus on developing terms of reference, exchanging non-confidential information and data, assessing the effects of excess manufacturing capacity and identifying gaps in available information, according to the joint statement.

Countries outside the Organisation for Economic Co-operation and Development (OECD) have also been invited to join the initiative.