The Ministry of Commerce has already made its submission to the USTR on behalf of the concerned industries. It has rejected claims on excess capacity and forced labour in the Indian cotton textile sector, said Texprocil in a release.
After the US Supreme Court rejected President Trump’s tariff on imports, the United States Trade Representative (USTR) launched Section 301 investigations to examine whether countries maintain “structural excess capacity” in manufacturing through subsidies, suppressed wages or other policies that could distort trade.
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The Section 301 Committee will convene public hearings on April 28, 2026, in Washington, DC. While refuting the claim of structural excess capacity, the industry has pointed towards the strong domestic market. “The investigations of structural excess capacity in India’s cotton textile sector are entirely misplaced.
Our industry is driven by strong domestic demand, with a small percentage towards exports. Any adverse action under Section 301 would be inconsistent with ground realities and could disrupt a mutually beneficial trade relationship between India and the US,” said Vijay Agarwal, chairman, TEXPROCIL.
“Evidence of structural excess capacity and production exists for India. In 2025, India had a bilateral trade surplus with the United States of $42 billion. India’s global goods trade surplus sectors include textiles, health, construction goods, and automotive goods. For example, evidence suggests the solar module sector is plagued by excess capacity, including that India’s current module manufacturing is nearly triple the annual domestic demand. India also has created significant excess capacity in petrochemicals, steel, and other industries,” the US Federal Government had said in a note launching this investigation.
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In its submission, TEXPROCIL has emphasized that India’s cotton textile sector is fundamentally demand-driven, with over 80% of production absorbed domestically. “India is not an export-surplus economy in cotton textiles and the production trends across cotton, yarn, and fabric segments show stagnation or decline, not expansion indicative of excess capacity,” said Agarwal. India is also a big buyer of US cotton, the submission noted.
“India’s textile ecosystem is characterised by fragmentation, MSME participation, and capacity constraints-not excess. At the same time, the industry remains a major buyer of U.S. cotton, reinforcing the interdependence between the two economies.”