India Challenges Proposed US Tariffs, Defends Labour Standards Before USTR

Government, industry bodies and exporters prepare to oppose proposed USTR tariffs while India-US trade agreement negotiations move towards conclusion.

India will present a coordinated legal and economic defence against the proposed additional US tariffs on its exports during hearings before the Office of the U.S. Trade Representative's (USTR) Section 301 Committee.

The challenge follows the USTR's proposal to impose an additional 12.5% duty on imports from India under a Section 301 investigation examining whether countries effectively prohibit imports of goods produced with forced labour.

The Ministry of Commerce and Industry has rejected the USTR's findings and stated that India's legal framework and labour regulations do not support the conclusions reached in the investigation.

Representatives from the Federation of Indian Chambers of Commerce and Industry (FICCI), the Confederation of Indian Industry (CII), the Agricultural and Processed Food Products Export Development Authority (APEDA) and the Automotive Component Manufacturers Association (ACMA) are scheduled to appear before the USTR committee on July 8 and July 9.

Industry Bodies Present Their Arguments

FICCI stated that India's policy framework does not qualify as "unreasonable" or "discriminatory" under Section 301 of the US Trade Act. The industry body noted that India's labour safeguards are supported by constitutional provisions, the Bonded Labour System (Abolition) Act, the Child Labour (Prohibition and Regulation Amendment) Act and the four Labour Codes adopted between 2019 and 2020.

The organisation also highlighted mandatory Environmental, Social and Governance (ESG) reporting and Business Responsibility and Sustainability Reporting requirements for listed companies, while noting India's ratification of key International Labour Organization conventions against forced and child labour.

According to FICCI, imports from Myanmar and rice imported from Malawi during 2021–2025 do not establish any direct connection between India's imports and forced labour.

The organisation further stated that Indian exporters supplying US manufacturers already operate under buyer-directed compliance systems and voluntary certification programmes.

CII also opposed the proposed tariff, stating that the additional duty would increase costs for US manufacturers dependent on Indian inputs while disrupting established supply chains. The organisation advocated compliance-based cooperation through the India-US Trade Policy Forum instead of additional tariffs.

ACMA argued that India's automotive component industry follows established labour compliance systems and requested exemption for automotive components from the proposed duties, citing concerns over supply chain disruptions and higher costs for US manufacturers.

APEDA plans to defend India's agricultural exports, particularly rice, stating that India's rice sector does not rely on forced labour and complies with recognised standards.

India-US Trade Agreement Nears Conclusion

Speaking separately, Commerce and Industry Minister Piyush Goyal said negotiations on the India-US Bilateral Trade Agreement (BTA) have entered the final stage.

He said most key issues have been addressed and both countries are working towards concluding an agreement that could strengthen India's competitive position in the US market.

Following the US Supreme Court's decision to strike down tariffs imposed under the International Emergency Economic Powers Act (IEEPA), Goyal said discussions are continuing on an alternative mechanism that preserves India's competitive advantage.

According to Goyal, there are no major obstacles in concluding the agreement despite recent legal and policy developments in Washington.

He also said India's merchandise exports to the United States remained resilient despite higher tariffs and projected that exports during the April-June quarter would rise by around 15% year-on-year.

Goyal added that the India-UK Free Trade Agreement (FTA) coming into effect on July 15 is expected to create additional export opportunities for Indian businesses.

He also noted that legal scrutiny of the India-European Union Free Trade Agreement is expected to conclude within 10 to 12 days, after which it will move to the approval process.