India challenges proposed 12.5 per cent US tariff over forced labour findings

India has urged the US Trade Representative (USTR) to reconsider its proposed 12.5 per cent tariff, arguing that trade issues between the two countries should be resolved through bilateral negotiations rather than unilateral measures. It said the USTR’s Section 301 investigation into forced labour contains inconsistencies and does not justify the proposed action.

Participating in the public hearing, Joint Secretary in the Department of Commerce Brij Mohan Mishra said India strongly objects to the USTR’s determination in light of the country’s genuine engagement on forced labour issues.

He said India takes the elimination of forced labour seriously as a constitutional obligation and as a matter of international law and principle.

“India would like to highlight its concerns with the USTR’s report and findings against India,” he said.

Mishra argued that the USTR has not met the legal standards required under Section 301(d) of the Trade Act.

“A mere absence of a forced labour import prohibition without evidentiary basis of other statutory requirements cannot be construed as unreasonable under Section 301,” he added.

According to the written transcript of the hearing, held on July 8 and published on the USTR website, the determination does not explain the basis for imposing countrywide tariffs and groups 46 economies, including India, into a single category.

The USTR’s Section 301 investigation focuses on the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labour.

India said the methodology adopted in the investigation is flawed because it relies on case studies from only a handful of economies and broad trade patterns.

Mishra said the report depends on broad data and assumes that imports identified as involving forced labour are later exported to the US without providing sector-specific or country-specific evidence or establishing actual links with forced labour.

He added that, in India’s case, there is inadequate and insufficient evidence to show that the absence of a forced labour import ban provides an unfair competitive advantage that harms American industry.

“In conclusion, it is submitted that the USTR reconsider the imposition of tariff in light of the identified inconsistencies in the report in the Federal Register notice. We ask any trade problems be addressed within the framework of the India-US bilateral trade negotiation, not through unilateral measures such as this investigation,” he added.

India, he said, remains willing to engage constructively with the USTR through consultation and dialogue on any specific concern.

Representing the Agricultural and Processed Food Products Export Development Authority (APEDA), First Secretary at the Embassy of India in Washington, DC, Shreyans Gupta objected to the USTR’s observations regarding rice imports allegedly produced with forced labour and their impact on competition for US rice producers.

He said India’s rice imports are very small and cater only to targeted demand for specific and niche rice varieties.

Gupta said the total value of rice imported into India is less than three per cent of the value of rice exported from India to the US.

He added that regulatory safeguards prevent the export from India of imported rice produced with forced labour.

According to Gupta, exports of rice from India to the US are permitted only from rice mills and processing units registered with the agriculture ministry.

“For these reasons, the present investigation against India may be rescinded without prejudice,” Gupta said, while requesting that Indian rice be exempted from the proposed duty if the proceedings continue.

Industry body Ficci also urged the USTR to reconsider the proposed additional tariff.

“An additional tariff will increase costs not only for Indian exporters, but also for US manufacturers, importers, retailers, and ultimately, American consumers,” the chamber said, adding that higher tariffs would increase costs for businesses that already comply with regulatory standards.

Ficci said the proposed tariffs should be reviewed in light of India’s legal and regulatory safeguards, compliance mechanisms adopted by Indian industry, and the potential impact on legitimate trade and resilient India-US supply chains.

The Confederation of Indian Industry (CII) also opposed the proposal, saying the proposed 12.5 per cent additional tariff is neither supported by the evidence presented nor likely to achieve the stated policy objective.

The chamber said the USTR report does not establish that India’s policy framework places a burden on US commerce.

The USTR launched two separate Section 301 investigations on March 11 and 12, 2026, covering 60 economies over concerns related to forced labour and excess industrial capacity.

On June 3, the USTR issued its findings in the forced labour investigation and proposed additional tariffs on imports from those economies.

The proposal includes a 10 per cent tariff on imports from Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan, and a 12.5 per cent tariff on imports from 54 other economies, including India and China.

The proposal has not yet been finalised.

The USTR will consider the comments and testimonies submitted during the hearing before taking a final decision on the proposed tariffs.