Discuss how allegations of 'industrial overcapacity' and 'forced labour' are reshaping global trade governance. What are the implications for India's manufacturing ambitions?

In 2025, the world's capacity to make steel reached a record 2,445 million tonnes, even though steel demand fell for the fourth year running [1]. Gaps like this, together with forced-labour concerns, have turned trade complaints into tools that reshape trade rules. In 2026 they stalled consensus at the US-hosted G20 [2].

Reshaping global trade governance

• Subsidies become a governance issue: Rising subsidies in some major non-OECD producers are driving excess capacity. The OECD projects this excess at 745 million tonnes by 2028 [3].
• Tariffs replace rules: Countries now act through national tariffs instead of WTO processes. China blamed U.S. tariffs for the "divergent opinions" that blocked G20 agreement on both issues [2].
• Consensus forums stall: At the G20, the accused member can block any text, so agreed outcomes give way to deadlock. Coalitions are filling the gap. The OECD Steel Committee and the Global Forum on Steel Excess Capacity work with 28 economies, which take in about 70% of global steel imports [4].
• Ethics enters trade rules: Forced-labour concerns bring human rights and supply-chain checks into market access. Raising both issues together let China reject both at once [2].
• Rerouting: The OECD reports Chinese steel moving through Southeast Asia to avoid anti-dumping duties [3].

Implications for India's manufacturing ambitions

Opportunities

• China+1 shift: Buyers want supply chains they can trace. This favours trusted suppliers and could bring investment into PLI sectors.
• India is one of the few regions where steel capacity is still growing strongly [4].

Risks

• Diverted dumping: China exported a record 131 million tonnes of steel in 2025 [3]. Steel shut out of the US looks for open, growing markets like India. DGTR anti-dumping duties are slow and cover one product at a time.
• Compliance costs: Supply-chain checks raise costs for MSMEs that rely on Chinese inputs in solar and electronics.
• Weaker growth: The WTO expects world merchandise trade growth to slow to 1.9% in 2026 [5], which leaves less room for exports.

Both concerns are real, but one-country tariffs are breaking up the global trade system. India should back joint action based on shared data. At the G20, it should push to deal with overcapacity separately, through clear subsidy disclosure. At home, it should strengthen trade remedies and supply-chain tracing. Building on its 2023 presidency theme, "One Earth, One Family, One Future", India can keep rules-based, inclusive trade (SDGs 8 and 9) at the centre of its manufacturing push.