India is anticipating a favourable adjustment in the United States' proposed tariffs on Indian goods, following its recent notification to restrict the import of products manufactured using forced labour, a move that aligns with international benchmarks.
Key Points
- India expects some relief in US tariffs on its goods under the Section 301 investigation after issuing a notification to curb forced labour imports.
- The US trade representative (USTR) had proposed a 12.5 per cent additional duty on India and other economies due to concerns over forced labour.
- India's directorate general of foreign trade (DGFT) has defined forced labour in line with the International Labour Organization (ILO) convention.
- New Delhi's alignment with international benchmarks on forced labour is expected to lead to a better tariff outcome in the USTR's final report.
- India and the US are also negotiating a trade deal, which may address concerns over Section 301 investigations.
The Indian government expects some easing in the United States' (US) tariff proposal on Indian goods under Section 301 investigation after it issued a notification to curb the import of goods whose manufacturing involves forced labour, an official said on July 16, Wednesday.
"There should be some relief in that (tariff following Section 301 probe)," the official said without quantifying the expected tariff revision.
USTR's Proposed Duties
The office of the US trade representative (USTR) last month proposed 12.5 per cent additional duty on India and several other economies after an investigation under Section 301 of the US Trade Act, 1974, on imports linked to forced labour.
Under the same probe, the USTR has proposed a lower tariff of 10 per cent on a handful of economies, including Pakistan, Indonesia, Mexico and Canada, among others, for imposing a "partial regime" to prevent the import of goods made with forced labour.
India's New Notification
The Indian government this week issued a notification to curb the import of goods manufactured using forced labour.
The directorate general of foreign trade (DGFT) in its notification defined forced labour as "all work or service which is extracted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily, as defined under the International Labour Organization (ILO) forced labour convention".
The notification aligns India with the international benchmark on forced labour that is invoked domestically by the US.
New Delhi now expects a better tariff outcome for Indian goods in the USTR's final report on the probe, which is likely to be released this month, according to the official quoted above.
Ongoing Trade Probes and Negotiations
The USTR has initiated another probe against India under Section 301, alleging excess capacity, whose draft report is yet to be released.
This section of the US Trade Act allows Washington to probe and act against trade practices that it considers harmful to US commerce.
The US's Section 301 investigations against India are being viewed as a substitute for the reciprocal tariffs imposed by the Donald Trump administration under the International Emergency Economic Powers Act (IEEPA) in April 2025. Those tariffs were struck down by the US Supreme Court in February.
At the same time, India and the US remain engaged in negotiations for a trade deal, which is likely to address New Delhi's concerns over Washington's Section 301 investigations against India.
