India Rejects USTR Probes Under Section 301 on Excess Capacity and Forced Labour

India has formally refuted allegations of excess capacity and forced labour raised by the United States Trade Representative under Section 301 of the Trade Act of 1974. The response was submitted amid ongoing investigations covering multiple economies and industrial sectors.

India argued that the probes lack a legal basis and sufficient evidence. It also maintained that ongoing bilateral trade negotiations provide a more appropriate forum to address trade concerns.

Background And Scope Of USTR Investigations

The USTR has initiated two separate Section 301 investigations focusing on excess structural capacity and forced labour practices. The excess capacity probe covers 16 economies, including India, across sectors such as petrochemicals and textiles.

The forced labour probe spans 60 economies, again including India, citing alleged harm to US trade interests. These investigations allow the US to potentially impose unilateral trade measures following their findings.

India’s Argument Against Excess Capacity Allegations

India urged the USTR to issue a negative determination and terminate the excess capacity investigation with immediate effect. It stated that selective focus on sectors where India holds a global trade surplus does not establish the presence of structural excess capacity.

The reply said there is no prima facie or empirical evidence linking Indian industrial capacity to distortions in US trade. It further argued that the investigation does not satisfy the statutory requirements outlined under Sections 301 and 302 of the Trade Act of 1974.

Trade Surplus and Bilateral Trade Agreement Context

India described its USD 42 billion trade surplus with the US in 2025 as a macroeconomic phenomenon arising from multiple global and domestic factors. It noted that India’s share in overall US trade is significantly smaller compared to several other trading partners.

According to the submission, this limits India’s ability to materially contribute to the widening of the US trade deficit. India also stressed that since both countries have initiated negotiations for a Bilateral Trade Agreement, trade issues should be resolved within that structured framework rather than through unilateral probes.

Response To Forced Labour Allegations

On the forced labour investigation, India stated that the probe fails to meet the legal threshold required for its initiation. The response criticised the assumption that forced labour practices automatically provide competitive advantages to Indian exporters.

India maintained that no evidence has been presented to show that its exports impose unfair burdens or restrictions on US commerce. It added that the investigation presumes outcomes without establishing factual or legal grounds.

Read More: India Electronics Trade FY26, Imports Surge to $116 Billion, Exports Grow 24.7%.

Conclusion

India’s response to the USTR probes reiterates its position against unilateral trade actions. The government has questioned both the legal basis and evidentiary standards of the Section 301 investigations.

It has emphasised the role of bilateral negotiations to address trade-related concerns constructively. India also conveyed its willingness to engage in consultations while maintaining that the current probes lack substantive justification.

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