India is set to challenge the proposed US tariffs on exports before the US Trade Representative (USTR) next week, arguing that findings related to alleged forced labour are legally flawed and could negatively impact American businesses and consumers, according to a report by the TOI Business Desk citing PTI.
Background of the Dispute
Last month, the USTR proposed an additional 12.5 per cent tariff on Indian goods under forced-labour import rules, invoking Section 301 of the Trade Act of 1974. The proposal also covered several other countries. Section 301 is considered one of the most powerful US unilateral trade tools, allowing investigations into foreign trade practices and imposition of tariffs or restrictions.
India's Legal Counter-Arguments
India has already submitted written responses stating that the USTR findings do not adequately consider the country's “robust domestic legal regime”, which it describes as a structured framework combining statutory prohibitions, institutional mechanisms and ongoing policy measures aimed at preventing forced labour. The government maintains that its regulatory system reflects a progressive approach that reduces vulnerability to forced labour across supply chains.
Representatives from the commerce ministry along with industry bodies including APEDA, FICCI, CII and ACMA will present India’s counter-arguments at a public hearing scheduled for July 8, according to PTI.
Industry Responses
In its submission, the Confederation of Indian Industry (CII) argued that India’s policy framework does not qualify as “unreasonable” or “discriminatory” under Section 301(b) of the US Trade Act of 1974. It added that India has a strong constitutional and statutory system ensuring that companies cannot engage in forced labour.
The Federation of Indian Chambers of Commerce and Industry (FICCI) said Indian export supply chains serving the US market operate under established compliance systems that include traceability, supplier due diligence, independent audits and responsible sourcing practices.
The Automotive Component Manufacturers Association (ACMA) also said India’s auto-component sector is organised, technology-driven and governed by established labour and compliance frameworks, adding that forced labour is neither inherent in nor consistent with its operations.
Other organisations, including the All India Spice Exporters Forum and the All India Vegetables Dehydrated Manufacturer Development Association, have also submitted their responses to the USTR on the issue.
| Industry Body | Key Argument |
|---|---|
| CII | Framework not unreasonable or discriminatory under Section 301(b) |
| FICCI | Compliance systems include traceability, due diligence, audits |
| ACMA | Auto sector organised, forced labour inconsistent with operations |
| Spice Exporters Forum | Submitted response to USTR |
| Vegetables Dehydrated Manufacturers Association | Submitted response to USTR |
Upcoming Hearing and Implications
The public hearing before the USTR on July 8 will allow India to present its counter-arguments directly. India says the proposed tariffs would be detrimental not only to Indian exporters but also to American businesses and consumers. The government contends that the USTR findings are legally flawed and ignore India's legal safeguards against forced labour.
The move is part of a broader set of trade actions that the US says are aimed at addressing supply chain practices linked to forced labour. India's challenge underscores the escalating trade friction between the two countries over labour-related import restrictions.
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