Is this the same investigation that produced the 10 percent duty?

No. The 10 percent duty came from the forced-labour Section 301 action published on 28 July 2026. The excess-capacity Section 301 is a separate investigation, initiated on 11 March 2026 and published in the Federal Register on 17 March 2026 under dockets USTR-2026-0067 and USTR-2026-0068. It is still open and has produced no duty.

Has a rate been set on Indian textiles under this investigation?

No. Under section 304 of the Trade Act USTR must first determine whether the practice is actionable, and only then decide what action to take. Neither determination has been published in respect of India, and as of 23 September 2026 nothing in the Federal Register sets a rate under this investigation for any of the sixteen named economies.

Does the notice actually mention textiles, or is that an inference?

It mentions them directly. The India passage states that India's global goods trade surplus sectors include textiles, health, construction goods and automotive goods, with textiles named first. The Bangladesh passage goes further and states that the Bangladeshi surplus is led by the textiles sector.

Would switching to another Asian supplier avoid this?

Mostly not. The sixteen named economies include China, Bangladesh, Vietnam, Indonesia, Cambodia, Thailand, Taiwan and Korea as well as India, so most of the usual alternatives are inside the same investigation. Not all of them: Pakistan and Sri Lanka, both common origins for woven fabric and apparel, are not named in the notice. That makes them outside this particular proceeding, not outside US tariff risk in general, since both still carry the 10 percent forced-labour duty that India does. A sourcing shift may make sense for other reasons, but for most buyers it is not a hedge against this investigation.

Why will you not tell me the number the newspapers are reporting?

Because it is a forecast attributed to an unnamed source rather than a rate in a government document, and this site does not publish a duty a buyer might pay until a primary carries it. We monitor the Federal Register for exactly this and will publish the rate, with a link to the document, on the day one is set.

When would a determination be likely?

No date has been published. The hearings began on 5 May 2026 and the comment dockets closed in April, so the record is built; what remains is the section 304 determination, which USTR takes at its own timing. We re-check the Federal Register on a running basis rather than against a scheduled date.

There Is a Second US Section 301 Investigation, and It Names Indian Textiles

Jump to section

Two investigations, not one
What the excess-capacity investigation is actually about
Textiles is named first in the India paragraph
What has happened since, and what has not
Why we are not publishing a number
What a US buyer should actually do with this
Frequently asked questions

Two investigations, not one

Most US buyers of Indian fabric now know the 10 percent figure, and most of them assume it is the whole of the US tariff question. It is not. There are two separate Section 301 proceedings running against India at the same time, they were opened within days of each other in March 2026, and only one of them has produced a duty.

The first is the forced-labour action. The United States Trade Representative initiated sixty Section 301 investigations in March 2026 concerning failures to act on forced labour, and the action published on 28 July 2026 is what sets the 10 percent duty Indian fabric currently carries. This site covers that one in detail, including the higher band applied to Vietnam and the tariff-rate quota route offered to four other suppliers.

The second is the excess-capacity action, and it appears nowhere in most buyers' understanding of the position. It was initiated on 11 March 2026 and published in the Federal Register on 17 March 2026, under dockets USTR-2026-0067 and USTR-2026-0068. It is a different investigation, on a different legal theory, and it has not concluded.

What the excess-capacity investigation is actually about

The notice's theory is that certain trading partners have built manufacturing capacity untethered from domestic and global demand, and that the result shows up as overproduction, persistent trade surpluses and underutilised capacity. It is a structural argument about how much a country can make, rather than an argument about labour conditions or intellectual property.

Sixteen economies are named: China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.

That list is worth reading twice if you source cloth. It contains India, Bangladesh, Vietnam, Indonesia, Cambodia, Thailand and China, which between them is most of the Asian woven and knitted supply base. Whatever this investigation eventually does, it is not aimed at one origin in a way a buyer could dodge by switching to the obvious alternative.

Textiles is named first in the India paragraph

The India passage is short and specific. It records a bilateral goods trade surplus with the United States of 42 billion dollars in 2025, and then states that India's global goods trade surplus sectors include textiles, health, construction goods and automotive goods. Textiles is the first sector named. The paragraph goes on to cite solar modules, where it says manufacturing capacity is nearly triple annual domestic demand, and to note significant excess capacity in petrochemicals and steel.

It is fair to point out that the solar and petrochemical examples carry the specific capacity evidence and textiles does not; textiles appears in the surplus-sector list rather than in the worked illustration. But it is named, in the operative paragraph, in a live investigation, and a buyer is entitled to know that.

Bangladesh is treated more pointedly still. Its passage records a bilateral goods surplus of 6.15 billion dollars and states that the surplus is led by the textiles sector, alongside a reference to export cash incentives across forty-three sectors including domestic textiles and leather.

What has happened since, and what has not

The statutory machinery has been running. USTR consulted its advisory committees and the inter-agency Section 301 Committee, requested consultations with each investigated government, opened comment dockets with an April deadline, and held public hearings beginning on 5 May 2026.

What has not happened is a determination. Under section 304 of the Trade Act, USTR must first determine whether the practice under investigation is actionable, and only if that determination is affirmative does it then decide whether action is appropriate and what that action should be. Neither step has been taken publicly in respect of India. There is no rate, no effective date and no product list.

We check the Federal Register on this routinely and, as of 23 September 2026, nothing has published that sets a rate under this investigation for any of the sixteen economies.

Why we are not publishing a number

Trade reporting in late September 2026 has carried a specific figure for what India might be tariffed under this investigation, sourced to a person familiar with the process, along with reporting that a broader trade deal is unlikely before parallel investigations into other suppliers conclude.

We are not repeating that figure, and the reason is a standing rule rather than a judgement about this particular story: this site does not publish a tariff rate a buyer might pay until a government document sets it. A single-outlet number attributed to an unnamed source is a forecast. If it is wrong, a buyer who built a landed-cost model on it has a real problem, and the model will have looked authoritative the whole time.

What we will do is say plainly that the reporting exists, that it points upward rather than downward, and that we will publish the rate the day a primary document carries one.

What a US buyer should actually do with this

Nothing changes on an invoice today. The duty payable on Indian fabric entering the United States is what it was yesterday, and any quote you hold is unaffected.

Three things are worth adjusting, though, and none of them is dramatic. First, stop treating the 10 percent forced-labour line as the total US policy risk on this origin, because it is one of two open proceedings and the other one names your product category. Second, when you model alternatives, note that the obvious substitutes are on the same list, so a sourcing shift to Bangladesh, Vietnam, Indonesia or Cambodia does not move you outside this particular exposure. Third, if you are negotiating an annual contract that runs past the first quarter of 2027, it is reasonable to ask how a duty change would be handled between the parties, rather than to assume today's rate for the whole term.

That last point is the practical one. A clause that says who absorbs a tariff change is cheap to agree in advance and expensive to argue about afterwards, and it costs nothing if no determination ever comes.

FAQ

Frequently asked questions

Is this the same investigation that produced the 10 percent duty?: No. The 10 percent duty came from the forced-labour Section 301 action published on 28 July 2026. The excess-capacity Section 301 is a separate investigation, initiated on 11 March 2026 and published in the Federal Register on 17 March 2026 under dockets USTR-2026-0067 and USTR-2026-0068. It is still open and has produced no duty.
Has a rate been set on Indian textiles under this investigation?: No. Under section 304 of the Trade Act USTR must first determine whether the practice is actionable, and only then decide what action to take. Neither determination has been published in respect of India, and as of 23 September 2026 nothing in the Federal Register sets a rate under this investigation for any of the sixteen named economies.
Does the notice actually mention textiles, or is that an inference?: It mentions them directly. The India passage states that India's global goods trade surplus sectors include textiles, health, construction goods and automotive goods, with textiles named first. The Bangladesh passage goes further and states that the Bangladeshi surplus is led by the textiles sector.
Would switching to another Asian supplier avoid this?: Mostly not. The sixteen named economies include China, Bangladesh, Vietnam, Indonesia, Cambodia, Thailand, Taiwan and Korea as well as India, so most of the usual alternatives are inside the same investigation. Not all of them: Pakistan and Sri Lanka, both common origins for woven fabric and apparel, are not named in the notice. That makes them outside this particular proceeding, not outside US tariff risk in general, since both still carry the 10 percent forced-labour duty that India does. A sourcing shift may make sense for other reasons, but for most buyers it is not a hedge against this investigation.
Why will you not tell me the number the newspapers are reporting?: Because it is a forecast attributed to an unnamed source rather than a rate in a government document, and this site does not publish a duty a buyer might pay until a primary carries it. We monitor the Federal Register for exactly this and will publish the rate, with a link to the document, on the day one is set.
When would a determination be likely?: No date has been published. The hearings began on 5 May 2026 and the comment dockets closed in April, so the record is built; what remains is the section 304 determination, which USTR takes at its own timing. We re-check the Federal Register on a running basis rather than against a scheduled date.

Sources

Primary documents

The government and inter-governmental documents behind the dates and figures above, so you can read them yourself. Anything attributed to trade press or to a research note is named in the copy rather than linked here.

1. Initiation of Section 301 Investigations: Structural Excess Capacity and Production in Manufacturing Sectors, Federal Register, 17 March 2026 (Dockets USTR-2026-0067 and USTR-2026-0068. The India and Bangladesh passages are in section II.)
2. USTR Initiates Section 301 Investigations Relating to Structural Excess Capacity and Production in Manufacturing Sectors, 11 March 2026
3. USTR case page: Section 301, Structural Excess Capacity and Production in Manufacturing Sectors

Cite this post

Quoting this page? Paste the line below so the credit links back.

<a href="https://www.bennycotts.com/blog/us-section-301-excess-capacity-india-textiles-2026">There Is a Second US Section 301 Investigation, and It Names Indian Textiles</a>, Benny Cotts, 2026

Updated 23 September 2026 · Benny Cotts, Bhilwara

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