DA Editorial Team
On 7 October, the United States announced that 14 economies had agreed to a commitment to address global excess industrial capacity, with the European Union also supporting the statement. India is among the countries named as signatories, alongside Argentina, Australia, Canada, France, Germany, Japan and Poland. The group will start with autos, electric vehicles, batteries, semiconductors and solar panels. Everyone understands whom the statement is aimed at. China, which did not sign, warned on 9 October that it “will take necessary countermeasures” if its interests are harmed in the name of overcapacity.
India’s government has not, as far as we can find, offered a detailed public explanation of why it joined. That is a mistake. A decision with potential consequences for tariffs, supply chains and relations with a neighbour deserves to be explained to Parliament and to the country, not left to be inferred from a statement drafted in Washington.
There are reasonable arguments for joining. India has its own concerns about floods of cheap imports, and Finance Minister Nirmala Sitharaman has said that non-tariff barriers remain the main obstacle in trade with China, with little progress after years of engagement. India is also trying to build manufacturing in some of the same sectors the group has named. Being at the table when rules are written is usually better than being outside it.
But there are risks. Indian manufacturers depend on Chinese components and raw materials for many products, and a tariff spiral could raise their costs. India is still negotiating with Washington, where the first tranche of a trade deal is in legal drafting, and critics will ask whether the signature was a payment for goodwill. Brazil, Indonesia, Russia and Saudi Arabia also stayed out, which shows that other large economies see it differently.
We suggest the government make three commitments. First, say publicly what India expects the group to do, and what it will not agree to, particularly on tariffs aimed at specific countries. Second, protect strategic autonomy by keeping channels open with Beijing, including on market access for Indian goods. Third, ensure the effort serves Indian workers and firms, with support for domestic capacity rather than a simple shift of dependence from one supplier to another.
A confident India does not need to choose sides in every contest. It does need to explain its choices.