The Indian government expects some relief in US tariff proposals on Indian goods following its recent notification to curb forced labour imports. As reported by Business Standard, an official stated on Wednesday that there should be some relief in the tariff following the Section 301 probe, though the expected tariff revision was not quantified. This development comes after the Office of the US Trade Representative (USTR) proposed 12.5 per cent additional duty on India and several other economies following an investigation under Section 301 of the US Trade Act, 1974, on imports linked to forced labour. The USTR has also proposed a lower tariff of 10 per cent on a handful of economies, including Pakistan, Indonesia, Mexico and Canada, for imposing a 'partial regime' to prevent the import of goods made with forced labour.
The Union government has amended its Foreign Trade Policy (FTP), 2023, to prohibit the import of goods that are produced, either wholly or partly, through the use of forced labour. According to reports from PTI and Angel One, the change was notified by the Directorate General of Foreign Trade (DGFT) through a gazette notification dated July 13, 2026. The new provision will take effect 30 days after its publication in the official gazette, with a new paragraph added stating that 'the import of goods produced or manufactured, wholly or in part, through the use of forced labour is prohibited'. The notification was issued under the Foreign Trade (Development and Regulation) Act, 1992, with the approval of the Minister of Commerce and Industry. The amendment adds Paragraph 2.20B to the Foreign Trade Policy, 2023, introducing the comprehensive ban on forced labour goods. As per GTRI, the notification does not immediately prohibit imports from any country or ban specific products, but empowers the DGFT to identify and restrict specific goods through future investigations and notifications. This marks the first time India has issued a norm to curb imports related to forced labour, according to a commerce ministry official.
The amendment comes at a time when the United States is examining forced labour practices in 60 economies, including India. As reported by PTI, the Office of the US Trade Representative (USTR) is carrying out investigations under Section 301, alleging that these countries have not properly enforced restrictions on the import of goods made with forced labour. The USTR has initiated another probe against India under Section 301, alleging excess capacity, whose draft report is yet to be released. The US' Section 301 investigations against India are being viewed as a substitute for the reciprocal tariffs imposed by the Donald Trump administration under the International Emergency Economic Powers Act (IEEPA) in April 2025, which were struck down by the US Supreme Court in February. The latest amendment reflects India's proactive response to these trade pressures and strengthens its position against potential US tariff measures. India is currently engaged with the US on the matter as both sides are negotiating a bilateral trade agreement (BTA).
Under the amended policy, the central government may issue a notification at any time to ban the import of particular goods if an inquiry or other relevant evidence shows that they have been produced using forced labour. According to the DGFT, the Directorate General of Foreign Trade (DGFT) will conduct inquiries into whether imported goods were made using forced labour. If evidence is found, it can recommend that the government prohibit imports of those products, with the inquiry process to follow the procedures prescribed in the Handbook of Procedures, 2023. The Central Government may notify specific goods for import restrictions based on the findings of an inquiry or other material it considers appropriate. The government has been granted greater flexibility to act against imports linked to forced labour, with authorities now able to rely on any suitable material while making such decisions. As per GTRI, the effectiveness of the new framework will largely depend on how investigations are conducted, the evidence required to establish forced labour, and the categories of goods that are eventually brought under its ambit. The notification issued Monday will be effective after 30 days, by which time USTR's recommendations are expected to be in place.
The DGFT has also inserted a new provision in Chapter 11 of the FTP, 2023, defining forced labour. As reported by PTI and Angel One, under the policy, 'forced labour' will include all work or service exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily, as defined under the ILO Forced Labour Convention, 1930 (No. 29). The notification adopts the definition contained in the International Labour Organization's (ILO) Forced Labour Convention, 1930 (No. 29), with the DGFT stating that the amendments strengthen India's trade policy framework by enabling the government to restrict imports linked to forced labour while bringing the FTP in line with the ILO convention. The government emphasizes that these changes align India's trade policy with internationally accepted labour standards and strengthen the country's legal framework to stop the import of goods linked to forced labour. According to GTRI, by adopting the ILO Forced Labour Convention definition verbatim, India aligns itself with the same international benchmark the United States invokes domestically, as noted by EY India's trade policy leader Agneshwar Sen. Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), calls India's notification a sensible first step, emphasizing that the real challenge is proving that a product is made with forced labour when production spans multiple countries and opaque supply chains. The priority should be to build credible traceability and due-diligence systems that protect legitimate trade while ensuring that forced-labour rules do not become arbitrary non-tariff barriers.
India has challenged the US proposal to introduce another round of tariffs linked to alleged forced labour, arguing that the American approach is inconsistent and that such concerns should be addressed through bilateral trade negotiations rather than unilateral measures. Brij Mohan Mishra, Joint Secretary in the Ministry of Commerce, appeared before a panel of the Office of the US Trade Representative (USTR) last week, questioning the rationale behind the proposed tariffs and drawing attention to what India considers inconsistencies in the US framework. Mishra noted that the USTR excludes nearly 1,600 products that cannot be manufactured or cultivated in the US from its forced labour-related scrutiny, stating that such exemptions undermine the policy rationale of addressing forced labour impact in the global supply chain. He also criticised the US policy of granting lower tariff rates for textile products manufactured using cotton and other related inputs originating from the US, arguing that this mechanism operates as an arbitrary requirement that influences foreign manufacturers' sourcing decisions without fully addressing forced labour concerns. While presenting India's objections, Mishra reiterated that the country remains open to engaging with the US and maintained that issues of this nature should be settled through the ongoing India-US bilateral trade negotiations rather than through Section 301 investigations. The Office of the US Trade Representative (USTR) released the draft investigation report on forced labour in June, with public comments closing on July 6. As per Business Standard, India's Commerce Secretary Rajesh Agrawal had said on Monday that the final report is expected this month, after Washington considers the submissions. On Monday, commerce secretary Rajesh Agrawal had said the framework agreement between India and the US may find "possible pathways" to deal with the probes, according to The Times of India. New Delhi now expects a better tariff outcome for Indian goods in the USTR's final report on the probe, which is likely to be released this month, according to the official quoted by Business Standard.
The success of India's new framework will depend on robust enforcement, supply-chain traceability and due diligence without creating arbitrary trade barriers. As noted by GTRI, verifying whether products have been manufactured using forced labour remains challenging because modern supply chains often span multiple countries and involve limited traceability. The report highlights that the US and the EU continue to import products from sectors where forced-labour concerns have been raised, pointing out the practical difficulties of implementing such measures. Manoj Mishra, Partner and Tax Controversy Management Leader, Grant Thornton Bharat, sees the step as a significant policy shift in India's trade framework, noting that while India has so far relied largely on labour and criminal laws to address forced labour domestically, the FTP now incorporates a dedicated trade measure aligned with international standards under the ILO Forced Labour Convention. Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), calls India's notification a sensible first step, emphasizing that while India has so far relied largely on labour and criminal laws to address forced labour domestically, the FTP now incorporates a dedicated trade measure aligned with international standards under the ILO Forced Labour Convention. Agneshwar Sen, EY India's trade policy leader, notes that by adopting the ILO definition verbatim, India aligns itself with the same international benchmark the US invokes domestically, stating that this is the principled core: India is not merely rebutting the US charge, it is asserting that it too can police forced labour in its supply chains. The priority should be to build credible traceability and due-diligence systems that protect legitimate trade while ensuring that forced-labour rules do not become arbitrary non-tariff barriers. The Section 301 investigation proposed a lower tariff of 10 per cent on some economies, including Pakistan, Indonesia, Mexico and Canada, crediting them for imposing a 'partial regime' to prevent the import of goods made with forced labour. According to GTRI, the notification creates an enabling framework rather than an immediate ban, with DGFT empowered to investigate complaints, seek information and recommend restrictions before the government can prohibit specific products through separate notifications.
