New Delhi, Jun 10 (PTI) India on Wednesday rejected allegations of surplus capacity in the textiles and steel sectors, saying that per capita consumption of these products in the country remains among the lowest in the world.

The remarks assume significance as the Office of the United States Trade Representative (USTR) in March launched a probe regarding the acts, policies, and practices of 16 economies, including India, under Section 301(b) of the Trade Act of 1974, relating to structural excess capacity and production in manufacturing sectors.

According to the USTR, certain countries may be exporting their problems with excess capacity and production to America.

Director General of Trade Remedies and Additional Secretary in the commerce ministry Amitabh Kumar said that overcapacity has not come under any of the trade remedial laws in the WTO (World Trade Organization) framework and it is a new narrative. And of course, the objective is to target a particular country.

"We do not think we have overcapacity in the textiles sector. Our per capita consumption of all kinds of textile products is abysmal, particularly in manmade fibre and technical textiles. Ours is a hot, tropical climate; we wear cotton. How do we have overcapacity?.

"In steel also, our per capita consumption is so low. We have one of the lowest; we may be the second largest producer of steel, but compared to our population, our economic and growth imperative, it's one of the lowest," he told reporters here.

India is a net importer of manmade fibres, besides cotton.

In its submission, India has rejected the allegations, and has stated that the USTR notice has not provided cogent rationale or prima facie evidence to substantiate its allegation that India has structural excess capacity in its major industries, leading to a trade surplus with the US.

At present, India's per capita fibre consumption is 5.5 kg, of which MMF (manmade fibre) consumption per capita is 3.1 kg only, which is among the lowest as compared to the world per capita MMF consumption, even below Africa.

Similarly, India's per capita steel consumption crossed the 100 kg mark last year, reflecting a significant structural shift in the country's industrial development. However, it remains well below the global average of more than 200 kg and China's per capita consumption of over 600 kg.

As per experts, high tariffs imposed by the US on countries like China has led to dumping of steel in other countries.

A steel measure in the UK has also become a sticking point in the implementation of the India-UK free trade agreement.

From July 1, 2026, the UK will limit tariff-free steel imports, reducing overall quota volumes by 60 per cent compared to the steel safeguard measure. Any imports above these levels will then face a 50 per cent tariff.

Kumar also said that trade remedy measures play an important role in addressing unfair trade practices, strengthening domestic manufacturing and supporting a rules-based international trading system. PTI RR MR

Structural excess capacity allegations rejected as India cites low per capita consumption in textiles and steel. India has rejected allegations of structural excess capacity in textiles and steel, saying low per capita consumption in both sectors shows no basis for the claim. In response to a United States Trade Representative probe under Section 301, India stated that the notice lacks cogent rationale and prima facie evidence to support the allegation that its major industries create trade surplus through surplus capacity. The trade remedies authority also said excess capacity is not recognised within WTO trade remedial laws.