India says U.S. forced labour tariff approach inconsistent; exempts 1,600 items deemed critical to its needs

India has flagged inconsistencies in the U.S. approach to tariffs at a public hearing on the U.S. Trade Representative’s (USTR) proposal to impose levies on goods linked to forced labour.

Testifying before a USTR panel on Wednesday (July 8, 2026), Brij Mohan Mishra, Joint Secretary in the Ministry of Commerce, pointed out that the U.S. exempts 1,600 items that cannot be produced or grown within the country from scrutiny of forced labour.

“What we submit is that the exemptions provided by the USTR not only undermine the policy rationale of addressing forced labour impact in the global supply chain but also of preventing such impact caused by circumvention practices,” Mr. Mishra said, in response to questions from the USTR panel.

He also flagged that the U.S. levies reduced tariff rates on exports of textile products manufactured using U.S. cotton and related items.

“By providing reduced tariff rates on the basis of imports of U.S.-origin textile inputs, the textiles mechanism operates as an arbitrary requirement that influences and constrains the sourcing decisions of foreign manufacturers, without fully addressing the concern of forced labour,” Mr. Mishra said.

At the same time, he said India remained open to dialogue, and all concerns need to be dealt with in the framework of the India-U.S. bilateral trade negotiations and not in a specific unilateral manner as is being provided in the Section 301 investigations.

Representatives of industry bodies FICCI and CII also presented their views on the U.S. proposal to impose tariffs ranging from 10 to 12.5% on imports from 60 economies that Washington says have failed to prevent goods made with forced labour from entering global supply chains.

“An additional tariff will increase costs not only for Indian exporters, but also for U.S. manufacturers, importers, retailers and ultimately American consumers,” Poornima Shenoy, FICCI representative in the U.S., said in her testimony before the USTR panel.

She said many U.S. industries rely on long-standing sourcing relationships with Indian suppliers because they deliver products of quality, reliability and ensure full compliance.

“Higher tariffs for these established supply chains will raise costs for businesses that already follow compliance standards. It will not help in identifying goods produced with forced labour. It would simply make trusted supply chains more expensive,” Ms. Shenoy said.

In its counter to the proposed tariffs, CII representative Suchita Sonalika said India’s policy framework does not qualify as ‘unreasonable’ or ‘discriminatory’ under Section 301(b) of the Trade Act of 1974.

Ms. Sonalika also asserted that India has a robust constitutional and statutory framework that ensures Indian companies cannot practice forced labour.

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 54 economies.

India has also submitted that the USTR has failed to meet the evidentiary requirements to establish how the absence of bans in these countries conclusively or substantially distorts market conditions and undermines the profitability of compliant firms.

“India submits that a mere absence of a forced labour import prohibition, without meeting the evidentiary basis of other statutory requirements, cannot be construed as “unreasonable” within the meaning of Section 301 of the Act,” it added.

The country has stated that the USTR has not undertaken an economy-specific analysis of laws and practices across the 60 investigated economies; instead, it has issued a sweeping determination that all such approaches are inadequate without considering the specific measures being implemented by the economies.

“In relation to India, there is inadequate and insufficient evidence that the lack of a forced labour import ban causes an alleged unfair comparative advantage to the detriment of the U.S. industry. Evidence across sectors of major exports of India to the U.S. does not suggest any linkage with forced labour inputs,” it added.