As per industry experts, India’s constitutional guarantees, labour regulations, and enforcement mechanisms sufficiently protect labour rights. They contend that India’s laws, policies, and practices do not hinder or limit US commerce, contrary to the assumptions underlying the investigation.
The insiders also noted that imposing a uniform tariff across all imports does not differentiate between compliant and non-compliant supply chains. They assert that this proposed tariff would increase costs for US manufacturers, importers, retailers, and consumers dependent on established sourcing relationships with Indian suppliers, without necessarily enhancing efforts to prevent imports produced through forced labour.
Furthermore, they emphasized that a lack of a specific ban on importing goods made through forced labour does not equate to a policy that promotes such imports. They argued it also does not provide an unfair competitive edge to Indian exporters or disadvantage foreign companies.
Industry sources highlighted that India’s legal framework, combined with compliance systems adopted by export-oriented firms, reflects a commitment to responsible business practices, risk management, and internationally recognized labour standards.
“The presence or absence of a specific legislative framework cannot solely determine whether goods exported from India are produced under forced labour or whether Indian supply chains pose an elevated risk,” the sources stated, suggesting that assessments of forced labour risks should be based on evidence related to specific sectors, products, and supply chains.
They also called on the USTR to carefully consider the potential effects of the proposed tariffs, particularly in sectors where exporters are already functioning within strong legal, commercial, and buyer-driven compliance frameworks.
India has objected to the proposed 12.5% tariff during hearings before the USTR, claiming that the investigation does not meet the legal criteria for initiation under Section 301 of the US Trade Act of 1974.
In its recent submission, India stated that the USTR’s initiation notice mistakenly assumes that forced labour provides Indian exporters with a competitive edge over US producers. It claimed that there is no evidence indicating that Indian exports offer any artificial advantage or hinder US commerce.
Background
The USTR initiated the Section 301 investigations on March 11 against India, China, the European Union, Japan, and several other economies regarding alleged unfair trade practices affecting American manufacturing.
Separate inquiries address allegations of forced labour involving approximately 60 economies and excess industrial capacity involving 16, including India.
Earlier this year, India rejected both allegations, asserting that the investigations do not meet the legal criteria under Sections 301 and 302 of the Trade Act of 1974.
India has also urged the US to address trade issues through ongoing Bilateral Trade Agreement (BTA) negotiations instead of unilateral tariff actions. Government submissions have argued that India’s projected $42 billion trade surplus with the US in 2025 illustrates broader macroeconomic factors rather than unfair trade practices, noting that India comprises a relatively small portion of overall US imports.
