--- title: "India, US industry clash at USTR hearings over subsidies and overcapacity" type: "News" locale: "en" url: "https://longbridge.com/en/news/287091188.md" description: "The USTR's Section 301 hearings have intensified Indo-US trade tensions, with US industry groups advocating for tariffs on Indian goods due to claims of unfair subsidies and overcapacity. Indian officials countered that their manufacturing growth is market-driven and compliant with trade rules. Key testimonies highlighted concerns over Indian steel and solar industries benefiting from government support, while India defended its practices, emphasizing domestic demand and balanced trade profiles." datetime: "2026-05-20T07:25:00.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/287091188.md) - [en](https://longbridge.com/en/news/287091188.md) - [zh-HK](https://longbridge.com/zh-HK/news/287091188.md) --- # India, US industry clash at USTR hearings over subsidies and overcapacity The Office of the United States Trade Representative’s (USTR’s) Section 301 hearings have turned into a fresh flashpoint in Indo-US trade ties, with American industry groups pushing for punitive tariffs on Indian goods over allegations of state-backed overcapacity and unfair subsidies, while Indian officials mounted an aggressive defence, arguing that the country’s manufacturing expansion is market-driven, demand-led and fully compliant with global trade rules. During the oral hearing earlier this month, Jeremy Hekhuis, representing the American Iron and Steel Institute, said the Indian government was taking a page out of “China’s well-worn playbook” as it heavily subsidised its domestic steel sector. “India reported robust export growth in finished steel in 2025, a troubling trend for a market that purports to be focused on internal domestic growth. India’s steel industry operates in a protected market that benefits from substantial government subsidies, including export incentives, debt forgiveness, and preferential loans,” he added. The Section 301 investigations are widely seen as a substitute for reciprocal tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA) in April 2025, which the US Supreme Court struck down in February. Nicholas Fell, representing Eramet Marietta, the United States’ leading domestic manufacturer of manganese ferroalloys, said the US International Trade Commission had repeatedly found that Indian ferroalloy producers, at least with respect to silicomanganese, were export-oriented and had substantial production overcapacity and unused capacity. “The significant increase in ferroalloy imports from India and Malaysia since 2023 speaks further to the structural excess capacity and production maintained by manufacturers of manganese ferroalloys in those countries. We therefore support targeted Section 301 tariff measures on imports of manganese ferroalloys, and closely competing products from India and Malaysia, which would help preserve fair competition and support the viability of domestic production,” he appealed to the USTR. Laura El-Sabaawi from Wiley Rein, testifying on behalf of the Alliance for American Solar Manufacturing and Trade, said Indian solar producers received substantial government subsidies, including export subsidies, loan guarantees and tax exemptions, which allowed Indian producers to quickly ramp up their production and exports to the US solar market. “As a result of these government policies, by late last year, Indian solar module manufacturing capacity was on track to surpass 125 gigawatts annually, which is more than three times India’s home market demand,” she said. Brad Muller, vice-president of corporate communications at Charlotte Pipe and Foundry, said China and India continued to provide subsidies and other unfair incentives that had resulted in the obstruction of more and more foundries, to the point where their domestic capacity far exceeded domestic demand. “To hold Indian imports at or above US production costs today, the US would need to impose an ad valorem tariff rate of approximately 145 per cent. We urge USTR to do whatever is necessary under current trade law to restore fair competition, protect American workers, and allow the critical iron and plastics industries in the United States to not only survive, but to thrive again,” he said. Countering the claims, James Nedumpara, head of the Centre for Trade and Investment at India’s Ministry of Commerce and Industry, told the committee that the investigation “does not satisfy the statutory threshold” under US law, and that the initiation notice had failed to identify any specific Indian government act, policy, or practice that could be deemed actionable. “The initiation notice directed at India is therefore legally defective at its very foundation,” he said. Vinnie Mehta, director general of the Automotive Component Manufacturers Association of India, said India’s auto component industry exported $22.9 billion in FY25 and imported $22.4 billion — a near-perfectly balanced trade profile. “Such a trade profile is fundamentally inconsistent with claims of structural overcapacity,” he told the committee. He also argued that 60 per cent of Indian auto component exports fell within the ambit of existing Section 232 tariffs, meaning any additional Section 301 duties would amount to tariff stacking — which he called “contrary to USTR’s own practice”. Nedumpara pointed out that in each of the seven sectors under investigation, domestic consumption accounted for nearly 90 per cent of India’s production. The OECD’s 2025 outlook, he noted, acknowledged that India’s capacity expansion was driven by domestic demand. In solar modules, India accounts for just 3 per cent of global manufacturing capacity. In pharmaceuticals, its share of US pharmaceutical imports is 7.1 per cent. In textiles, India’s apparel exports to the US are built on “longstanding, commercially negotiated supply chain arrangements”, not state-directed overproduction. ## Related News & Research - [Inflation Just Hit 3.8%, and It's Becoming Kevin Warsh's Biggest Test as Fed Chair.](https://longbridge.com/en/news/287099549.md) - [Why Is Oklo Stock Surging On Wednesday?](https://longbridge.com/en/news/287096677.md) - [Micron's stock gets a boost. Are Samsung's problems helping?](https://longbridge.com/en/news/287092903.md) - [Go Big or Go Home? Top Investor Weighs In On Cerebras Systems Stock](https://longbridge.com/en/news/287032625.md) - [Inside The AI Chip Crunch: Intel Pressures PC Makers To Upgrade Fast](https://longbridge.com/en/news/287068550.md)