India Urges US to Resolve Trade Disputes Through Dialogue, Opposes Proposed 12.5% Tariff Over Forced Labour Concerns

Participating in a public hearing, Joint Secretary in the Department of Commerce Brij Mohan Mishra stated that India has engaged sincerely on the issue of forced labour and expressed serious concerns over the USTR's determination.

Mishra said India considers the elimination of forced labour a constitutional obligation and a matter of international law and principle. He highlighted concerns regarding the USTR's report and findings against India, stating that the investigation failed to meet the required legal standards under Section 301(d) of the Trade Act.

He argued that the mere absence of a forced labour import prohibition, without evidence establishing other statutory requirements, cannot be considered unreasonable under Section 301. According to the written transcript of the July 8 hearing published by the USTR, India stated that the determination does not provide adequate justification for countrywide tariffs and improperly places 46 economies, including India, under a single category.

The USTR's Section 301 investigation examined concerns regarding the failure to impose and effectively enforce restrictions on the importation of goods produced through forced labour.

India raised objections to the methodology adopted in the report, stating that the findings were based on case studies involving a limited number of economies and relied heavily on broad trade patterns. Mishra said the report assumes that imports identified as involving forced labour are exported to the United States without providing sector-specific or country-specific evidence establishing actual links with forced labour practices.

Regarding India, he stated that there is insufficient evidence to prove that the absence of a forced labour import ban provides an unfair competitive advantage that harms American industries.

"In conclusion, it is submitted that the USTR reconsider the imposition of tariff in light of the identified inconsistencies in the report in the Federal Register notice. We ask any trade problems be addressed within the framework of the India-US bilateral trade negotiation, not through unilateral measures such as this investigation," Mishra said.

India reiterated its willingness to engage constructively with the USTR through consultation and dialogue on specific concerns.

Representing the Agricultural and Processed Food Products Export Development Authority, Shreyans Gupta, First Secretary at the Embassy of India in Washington, DC, objected to the USTR's observations regarding rice imports allegedly produced through forced labour and their alleged impact on competitive conditions for rice exports and domestic sales in the United States.

Gupta stated that India's rice imports are extremely limited and primarily meet targeted requirements for specific and specialised rice varieties. He said the total value of rice imported into India, compared with the value of rice exported from India to the United States, is less than three per cent.

He added that regulatory safeguards prevent the export of imported rice produced through forced labour from India. Rice exports from India to the United States are permitted only through rice mills and processing units registered with the Agriculture Ministry.

Gupta requested that the investigation against India be withdrawn without prejudice and sought exemption for Indian rice from the proposed tariff if the proceedings continue.

Industry body Federation of Indian Chambers of Commerce and Industry submitted that the proposed additional tariff requires careful reconsideration. The chamber stated that an additional tariff would increase costs not only for Indian exporters but also for United States manufacturers, importers, retailers, and ultimately American consumers.

The chamber said higher tariffs would raise expenses for businesses that already comply with established standards. It urged reconsideration of the proposed tariffs in view of India's legal and regulatory safeguards, extensive compliance mechanisms adopted by Indian industries, and the potential impact on legitimate trade and resilient India-US supply chains.

The Confederation of Indian Industry also submitted that the proposed 12.5 per cent additional tariff is not supported by the evidence presented and is unlikely to achieve the stated policy objective. The chamber said the USTR report does not establish that India's policy framework places a burden on United States commerce.

The USTR initiated two separate Section 301 investigations on March 11 and March 12, 2026, covering 60 economies over concerns related to forced labour and excess industrial capacity.

On June 3, the USTR announced its findings in the forced labour investigation and proposed additional tariffs on imports from the affected economies. The proposal includes a 10 per cent tariff on imports from Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan, along with a 12.5 per cent tariff on imports from 54 other economies, including India and China.

The proposed tariff measures have not yet been finalised. The USTR will review public comments and testimonies before making a final decision on the proposed tariffs, making the ongoing proceedings a key point in the future direction of India-US trade relations.