Amid new US tariff plan, Centre bars import of goods using forced labour

The Commerce and Industry Ministry on Tuesday prohibited the import of goods manufactured using forced labour weeks after the United States Trade Representative (USTR) proposed 12.5 per cent tariffs on India linked to the issue.

The US had launched two Section 301 probes on India in March and subsequently proposed fresh tariffs on June 3 after the outcome of its first investigation found that India failed to “effectively enforce” a forced labour import prohibition, which had purportedly hurt US commerce. The outcome of the second investigation relating to excess capacity is yet to be released.

The Directorate General of Foreign Trade (DGFT), in an order dated July 13, has inserted a new paragraph in the Foreign Trade Policy (FTP) regarding “forced labour”, stating that the import of goods produced or manufactured, “wholly or in part”, through the use of forced labour is “prohibited”.

“The Central Government may, from time to time, specify, by notification, the goods whose import shall be prohibited under this paragraph, having regard to the findings of such enquiry or such other material as it may consider appropriate. The procedure for conducting an enquiry by the DGFT into the use of forced labour. The provisions of this notification shall come into effect after the expiry of 30 days from the date of its publication in the Official Gazette,” the notification said.

A senior Government official told The Indian Express that there are already certain provisions within existing regulations to take care of issues like forced labour, but the July 13 notification is “explicitly stating” it.

The official said that the use of “suo motu” makes it clear that we are not dependent on a complaint to take action. “We had implicit powers, but we have made it explicit, and it may have implications in the discussions that are going on,” the official said, hinting at the ongoing trade deal negotiations with the US.

While India has sought the review of proposed US tariffs of 12.5% citing inconsistencies in its Section 301 investigation, Joint Secretary in the Department of Commerce Brij Mohan Mishra, during a public hearing last week, said the country takes the elimination of forced labour seriously as a constitutional obligation, and as a matter of international law and principle.

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According to international standards, forced labour means all work or service that is exacted from a person under threat of penalty and not offered voluntarily.

Manoj Mishra, Partner and Tax Controversy Management Leader, Grant Thornton Bharat, said the introduction of a prohibition on imports of goods produced through forced labour marks a significant policy shift in the trade framework.

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, Mishra said.

“Announced amid heightened global scrutiny of supply chains and the ongoing USTR Section 301 investigation, the move strengthens India’s regulatory framework on ethical sourcing. However, its practical impact will largely depend on the enquiry mechanism and implementation framework to be prescribed under the Handbook of Procedures, which will determine the scope of compliance for importers,” Mishra said.

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Agneshwar Sen, Trade Policy Leader, EY India, said the latest move is a pragmatic piece of trade diplomacy. “The 30-day delayed commencement and DGFT-administered enquiry process gives India room to calibrate scope and pace. It converts this instrument into a reciprocal, rules-based instrument potentially usable in future BTAs, that is arguably WTO-consistent,” Sen said.

Former trade officer and head of think tank GTRI, Ajay Srivastava, said the measure will take effect in 30 days, adding that the order establishes a legal framework rather than an immediate import ban. Its effectiveness will depend on how the government conducts investigations, the evidence required to establish forced labour, and the products it ultimately targets, Srivastava said.

“The move comes as major economies tighten restrictions on goods linked to forced labour. The US has launched Section 301 investigations covering about 60 economies, including India, and has proposed a 12.5% tariff on imports from India and most other countries under review. The European Union and Pakistan are proposed to face a lower 10% tariff after introducing domestic measures to prohibit imports made with forced labour. Against this backdrop, India’s notification signals that it is strengthening its domestic legal framework in line with international standards, a step that could strengthen its position in future trade negotiations and market-access discussions,” Srivastava said.

According to GTRI, US authorities consider products such as cotton, textiles, solar-panel polysilicon, seafood, metals, batteries and electronics vulnerable to forced-labour risks, particularly when linked to China’s Xinjiang region. Yet, the US and the EU continue to import many such products from China, underscoring the challenges of enforcing forced-labour rules.