New Delhi: India Wednesday said it is engaging with the US in investigations into New Delhi’s alleged failure to prohibit trade in goods manufactured by forced labour under Section 31 as well as the bilateral trade agreement. The statement came in response to the proposed 12.5 percent additional tariffs on Indian goods by a US trade representative (USTR) a day before.
“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 2 February 2026 and in accordance with the joint statement released on 7 February 2026,” the Ministry of Commerce and Industry said in a statement.
The statement added: “The USTR has proposed imposing additional tariffs on imports from the 60 economies under Section 301 of the U.S. Trade Act of 1974. Products covered under section 232 tariffs and certain other products are excluded from these tariff proposals. A special mechanism has also been proposed for textile and apparel products that could allow a certain volume of imports from selected economies to enter the U.S. at lower tariff rates.”
The report published by USTR Jamieson Greer’s office Tuesday highlights that India, along with 59 other economies, including China, Pakistan and Canada, have failed to prohibit the trade of goods manufactured by forced labour. The lack of prohibition in the trade of such goods has created a market “distortion”, the USTR notes in the report and thereby has proposed two different additional tariff rates—10 percent and 12.5 percent.
Six countries, including Canada and Pakistan have introduced strong regulation to prohibit the trade in such goods, but lack enforcement mechanisms, leading to the proposed 10 percent tariff rate, the USTR report explained. However, the 54 other economies investigated since 12 March 2026, have weak regulation and enforcement mechanisms leading to the slightly higher rate.
The Ministry of Commerce and Industry in its statement Wednesday noted that these additional tariffs due to forced labour are “proposed tariffs” and “not yet final”.
The statement added: “Stakeholders can submit requests to participate in public hearings by 22 June 2026. Written comments can be submitted until 6 July 2026. Public hearings will be held on 7 July 2026. The USTR will consider the comments and testimony received before taking a final decision on the proposed measures.”
The latest proposal by the administration of President Donald Trump comes as a delegation led by Assistant USTR Brendan Lynch is currently in India to hold talks on the finalisation of the bilateral trade deal between New Delhi and Washington.
The interim deal and joint framework agreed to by both countries was announced in February 2026, days before the US Supreme Court struck down the Trump administration’s original tariff structure imposed under the International Emergency Economy Powers Act (IEEPA).
Since then, the Trump administration has sought other legal instruments to impose global tariffs including opening Section 301 investigations under the American Trade Act of 1974. India has engaged in government-to-government consultations over the Section 301 investigations with the US.
Section 301 of the Trade Act allows the USTR to investigate potential discriminatory trade measures imposed by foreign countries. If the USTR finds that such measures exist, they can propose additional measures including tariffs.
For India, the US Supreme Court’s move to strike down tariffs under the IEEPA led to a slight pause in further announcements of the framework of the interim trade agreement, as the negotiations were based on the additional duties imposed by the Trump administration under this particular law.
New Delhi has maintained that it remains interested in the completion and operationalisation of a bilateral trade deal as long as the agreement offers Indian exporters a comparative advantage for their exports.
The original interim trade deal based on the IEEPA tariffs had several advantages for Indian exporters especially textile manufacturers. The current Section 301 proposed tariffs also offers a potential carve-out for certain textile imports.
(Edited by Viny Mishra)
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