India Rejects Forced Labour Allegations, Continues Trade Talks with US

By Mahima Katal India is actively engaging with the United States over investigations conducted under Section 301 of US trade law concerning alleged forced labour practices and excess industrial capacity, even as both countries continue negotiations on an interim bilateral trade agreement.

The development comes after the Office of the United States Trade Representative (USTR) proposed imposing an additional 12.5% tariff on imports from India and 53 other economies, citing their failure to adequately prohibit imports of goods produced with forced labour.

In a statement issued on Wednesday, India's Commerce Ministry said New Delhi remains engaged with Washington as part of the ongoing Section 301 proceedings.

"India remains engaged with the US on the matter as a part of Section 301 proceedings. India is also parallelly engaged with the US for finalisation of a framework agreement as was announced on February 2, 2026, and in accordance with the joint statement released on February 7, 2026," the ministry said.

The USTR launched two separate Section 301 investigations in March covering 60 economies over concerns related to forced labour and excess industrial capacity. On June 2, it released findings from the forced labour investigation and proposed additional tariffs on imports from all 60 economies.

Under the proposal, imports from Canada, Ecuador, the European Union, Indonesia, Mexico and Pakistan would face an additional 10% duty, while products from 54 other economies—including India, China, Japan, Brazil, Australia, the United Kingdom and Saudi Arabia—would be subject to a 12.5% tariff.

US Trade Representative Jamieson Greer said countries that fail to address imports linked to forced labour create unfair competition for American workers.

"The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable," Greer said, adding that the US would no longer tolerate such disparities.

India has rejected the allegations and urged the US to address concerns through ongoing trade negotiations rather than unilateral tariff actions.

The Commerce Ministry emphasised that the proposed measures are not yet final. Stakeholders can submit requests to participate in public hearings until June 22 and provide written comments by July 6. Public hearings are scheduled for July 7, after which the USTR will review submissions before making a final decision.

The ministry also noted that products already covered under Section 232 sectoral tariffs, along with certain other categories, are excluded from the proposed duties.

Additionally, the USTR has proposed a special mechanism for textiles and apparel that would allow a specified volume of imports from selected economies to enter the US market at reduced tariff rates.

The proposal could have significant implications for Indian exporters, particularly in labour-intensive sectors such as textiles, apparel and manufacturing, while also adding a new dimension to ongoing efforts by New Delhi and Washington to conclude a broader trade framework agreement.