India-US trade pact awaits US excess capacity probe findings

India is one of 16 countries awaiting the excess capacity probe results. Others under investigation include China, the EU, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico and Japan.

“Unless the Section 301 tariffs on excess capacity are decided there can be no further progress on India-US BTA,” said Pankaj Chadha, chairman of EEPC India. “Let’s wait for final decision on 301 excess capacity tariffs.”

Engineering goods including steel and automobile products are among the target sectors. The USTR notification on the Section 301 excess capacity investigation said India’s global goods trade surplus sectors include textiles, health, construction goods and automotive goods. It cited the solar module sector as one example, saying India’s current module manufacturing is nearly triple annual domestic demand. It also flagged excess capacity in petrochemicals and steel.

Trade expert Biswajit Dhar said the US highlighted multiple sectors where excess capacity may exist in India and also mentioned “other industries,” which gives Washington wide latitude. “The list of items being investigated is formidable in India’s case,” Dhar said. “The US can come up with just any action against any item. India has to wait for these outcomes to get a better grip on the situation.”

The USTR noted India recorded a bilateral goods trade surplus of $58 billion with the US in calendar 2025. Indian government data shows the surplus narrowed to $34.41 billion in FY26 as imports from the US rose sharply while exports stayed flat.