New Delhi, July 2: India will mount a coordinated challenge before the United States next week against a proposed additional tariff on its exports, arguing that allegations linking its trade practices to forced labour are legally unsound, unsupported by evidence and could disrupt supply chains between the two countries. Government officials and leading industry organisations are scheduled to present India’s case before the Office of the US Trade Representative (USTR) Section 301 Committee on July 8 and 9.
The proposed action follows a USTR Section 301 investigation that seeks to impose an additional 12.5 per cent duty on imports from India over concerns regarding restrictions on goods allegedly produced using forced labour. The proposal remains open for public comments before a final decision is taken.
Representing Indian industry before the committee on July 8 will be Poornima Shenoy of the Federation of Indian Chambers of Commerce and Industry (FICCI) and Shuchita Sonalika of the Confederation of Indian Industry (CII). They will be followed by Dr Brij Mohan from the Ministry of Commerce and Industry and Shubham Arora of the Agricultural and Processed Food Products Export Development Authority (APEDA). Vinnie Mehta, Director General of the Automotive Component Manufacturers Association (ACMA), will present industry concerns on July 9.
The Ministry of Commerce and Industry has rejected the conclusions reached by the USTR, maintaining that India has a comprehensive legal framework to prevent forced labour. According to the ministry’s submission, the country’s statutory safeguards, institutional mechanisms and ongoing policy measures provide adequate protection against forced labour practices. It also argued that the USTR has failed to present sufficient evidence demonstrating that India’s import regime imposes an unreasonable burden on US commerce, a key requirement for action under Section 301.
CII has challenged both the legal and economic basis of the proposed tariff. It stated that India’s constitutional safeguards under Article 23, along with laws including the Bonded Labour System (Abolition) Act, the Child Labour (Prohibition and Regulation) Amendment Act and the Labour Codes introduced between 2019 and 2020, collectively establish a robust framework against forced labour.
The industry body further highlighted mandatory Environmental, Social and Governance (ESG) reporting and Business Responsibility and Sustainability Reporting requirements applicable to listed companies. It also noted that India has ratified key International Labour Organisation conventions concerning forced and child labour.
CII disputed examples cited in the USTR report, stating that India did not import rice from Myanmar or tobacco from Malawi during the 2021-2025 review period. It also pointed out that India imported US$1.537 billion worth of cotton from the United States during the same period, nearly twice the value of imports from China, arguing that this weakens claims that Indian trade policies unfairly affect American commerce.
According to CII, sectors such as forgings, foundries and agricultural machinery are highly capital-intensive, technology-driven and dependent on skilled labour, making the use of forced labour incompatible with their operations. It further stated that exporters supplying American manufacturers already comply with buyer-directed audits and internationally accepted certification mechanisms.
FICCI has also opposed the proposed tariff, stating that Indian export supply chains serving the US market operate under established compliance systems based on traceability, supplier due diligence, independent audits and responsible sourcing. It argued that imposing additional tariffs would increase costs for American businesses and consumers while disrupting resilient supply chains that have expanded significantly in recent years.
APEDA is expected to defend India’s agricultural exports by asserting that the country’s rice sector neither engages forced labour nor imports inputs produced through such practices. The authority maintained that Indian rice exports comply with recognised standards and should not face additional duties.
ACMA has urged the USTR to exempt automotive components from the proposed tariff, stating that India’s automotive component industry follows established labour compliance frameworks. The association argued that higher duties would increase production costs for US manufacturers, disrupt integrated supply chains and create sourcing uncertainty for the American automotive sector.
India has maintained that its constitutional protections, labour laws, regulatory mechanisms and corporate compliance systems already provide effective safeguards against forced labour, and has argued that the proposed tariff is unwarranted and risks undermining the growing India-US trade partnership.
