The United States has placed India and China on watch list for not doing enough to fight human trafficking and claimed that part of the enormous economic growth in the developing countries is being fuelled by bonded labour.

The Indian government does not fully comply with the minimum standards for elimination of trafficking, it said but conceded that New Delhi is making 'significant efforts' to fight bonded labour.

A new report released by the State Department showed on Wednesday that the most dismal record is of the US' Persian Gulf friends, including Saudi Arabia, Qatar, Kuwait and Oman who complete with Iran, North Korea and Myanmar for failure to stop human trafficking or take action against traffickers.

Equally dismal was the record of Sudan, Syria, Myanmar, Cuba, Fiji, Moldova and Papua New Guinea, according to grading done by the annual report.

Pakistan and Sri Lanka were somewhat better off as they were placed countries that do take steps to fight it -- Tier 2, second of the three categories in which the countries have been divided.

In India, the report said, clothing and brick making are two major booming industries in which forced labour, debt bondage and hazard conditions are common. Bracketed with India in clothing sector are Bangladesh, Jordan and Malaysia.

Similar conditions exist in shrimp industry in Thailand, it says. For brick making, India and China were bracketed.

It slammed China 'works and study' programme where it says children as young as 12 are reportedly subjected to forced labour. They work for long hours under hazardous conditions for low pay and suffer from physical abuse.

Forced labour in India, the report said, might constitute a bigger problem than sexual commercial exploitation which itself is a major problem. It blamed weak implementation of policies and corrupt officials for failure to effectively confront the scourge.

India, it said, is source, destination and transit country for men, women and children trafficked for the purposes of forced labour and commercial sexual exploitation.

"Internal forced labour may constitute India's largest trafficking problem: men, women and children are held in debt bondage and face forced labour working conditions in brick kilns, rice mills, agriculture and embroidery factories," the State Department report said.

The report, which discusses conditions in individual counties, recommended that India expand central and state government law enforcement capacity to conduct interstate law enforcement activities against trafficking and the Central Nodal Cells on trafficking to coordinate law enforcement efforts to investigate traffickers who cross state and national line.

It also wants New Delhi to take action to end 'complicity' of officials in trafficking, including prosecuting, convicting and punishing complicit employees with imprisonment and improve implementation of protection programmes.

It also wants strengthening compensation schemes for victims of forced labour and bonded labourers.

Besides, despite widespread reports of fraudulent recruitment practices, the Indian government did not report an arrests, investigation, prosecution, conviction or punishment of recruiters who participate in or facilitate the trafficking of Indian workers into situation of forced labour abroad.