The move, initiated under Section 301 of the US Trade Act of 1974, is part of Washington’s broader effort to crack down on products linked, directly or indirectly, to forced labour.
The USTR argues that the countries identified have failed to adequately prohibit or enforce restrictions on goods produced with forced labour. While the proposal is still subject to consultations and hearings before any final decision is taken, its implications have already sent ripples through export-oriented industries across the globe, including India.
India faces potential additional US tariffs of 10–12.5 per cent under a USTR proposal linked to forced-labour compliance concerns.
The scrutiny focuses less on India’s labour laws and more on supply-chain traceability, particularly imported inputs from China.
The proposal highlights growing pressure on exporters to prove transparent, risk-free sourcing in global value chains.
India’s presence on the list raised some eyebrows, given that the country outlawed bonded labour five decades ago through the Bonded Labour System (Abolition) Act, 1976, and has since maintained a robust legal framework aimed at preventing forced and exploitative labour practices.
However, the USTR’s concerns extend beyond a country’s borders and into the increasingly complex web of global supply chains.
The challenge lies in traceability. Modern manufacturing depends on components, raw materials and intermediate goods sourced from multiple countries before a finished product reaches the consumers.
For India, the spotlight has fallen not on its labour laws but on its supply chains, it seems. As per reports, the country’s use of imported inputs, particularly from China, has emerged as a key factor behind the USTR’s scrutiny.
In the textile and apparel sector, Indian manufacturers often use imported yarns, fabrics and other materials originating from Chinese supply chains. These links become especially sensitive when there is a possibility that cotton or textile inputs may have any connection to Xinjiang, a region that has long remained at the centre of international allegations concerning forced labour.
The United States has already enacted strict measures to prevent products linked to Xinjiang from entering its market, placing a premium on supply-chain transparency and documentation.
Similar concerns extend beyond textiles. As per reports, India’s rapidly growing solar manufacturing industry relies significantly on imported polysilicon, wafers and solar cells, many of which originate in Chinese supply chains that have previously faced scrutiny from US authorities.
Electronics presents another area of vulnerability. Smartphones, consumer electronics and industrial equipment assembled in India often reportedly contain Chinese components, cables and sub-assemblies.
If any of these inputs are traced to regions or programmes associated with labour-transfer schemes, exporters could face heightened compliance requirements and potential trade barriers.
In effect, the proposed tariffs appear more about whether Indian exporters can demonstrate that their supply chains are free from such risks.
This distinction is crucial, yet it also creates significant challenges. Verifying the origins of every input in a globally interconnected production network is a complex and costly exercise, particularly for industries that rely on imported materials, according to industry insiders.
New Delhi, however, has sought to temper the concerns. The Ministry of Commerce and Industry has emphasised that the proposed tariffs are not final and that stakeholders still have time to seek participation in public hearings. The Government has also indicated that it remains engaged with Washington under the Section 301 process while simultaneously negotiating a broader bilateral trade framework.
Industry representatives, meanwhile, have reacted sharply. One senior industry body official, speaking to the media, described the proposal as a threat to India’s textile and apparel sector.
Exporters also fear that additional duties could erode competitiveness in one of India’s most important overseas markets at a time when global demand remains fragile.
As the consultation process unfolds, the debate is increasingly centring on a contentious question: where does a country’s responsibility end in an era of deeply interconnected global supply chains?
Fibre2Fashion News Desk (DR)
