India bans the import of goods made using forced labour, even as U.S. investigation is pending

The Indian government has issued a notification banning the import of goods produced using forced labour; This is an important step towards paving the way for the signing of an interim trade agreement with the United States.

The United States is currently in the process of announcing its final decision on the tariffs it plans to impose on countries it says have not done enough to stop imports of goods made using forced labor.

The Ministry of Trade and Industry said in its communiqué: “The import of goods produced or manufactured wholly or partially through forced labor is prohibited.”

It added that the Central Government may from time to time specify goods whose import will be prohibited under this paragraph.

“The procedure for conducting an investigation by the Director General of Foreign Trade into the use of forced labor in the production of such goods shall be as set out in the Procedure Manual, 2023,” the statement said. The expression was also added.

The US found that India and 53 other countries “failed to implement and effectively enforce” bans on imports of goods produced using forced labor, according to a draft proposal submitted after the investigation. For this reason, he suggested imposing a 12.5% ​​customs duty on imports from these countries.

Commerce Secretary Rajesh Agrawal confirmed on Monday (July 13) that India had notified the US about the issue and protested the tariffs.

This pending decision has created significant uncertainty around the India-US trade deal; Commerce Minister Piyush Goyal and Mr. Agrawal said separately that India would sign an agreement only after it was determined that it would gain a comparative advantage over its rivals.

One of the key factors in establishing this comparative advantage is to see what tariffs the US plans to impose as part of its various investigations. The second investigation concerns whether U.S. trading partners used excess capacity to export to the United States to the detriment of the American economy. The draft report of the investigation in question has not been published yet.

According to the notification issued by the Ministry of Commerce, ‘forced labour’ means “all work or services, as defined under the ILO Forced Labor Convention, 1930 (No. 29), which is coerced from any person under threat of penalty and which the person in question does not offer voluntarily.”

According to Manoj Mishra, Partner and Tax Disputes Management Leader, Grant Thornton Bharat, the ban on imports of goods produced through forced labor marks a significant policy shift in India’s trade framework.

“While India has so far relied largely on labor and criminal laws to address the issue of forced labor domestically, its External Trade Policy now includes a specific trade measure in line with international standards under the ILO Forced Labor Convention,” Mr. Mishra said.

“This move, announced at a time of increased global scrutiny of supply chains and the ongoing US Trade Representative Section 301 investigation, strengthens India’s regulatory framework for ethical sourcing,” he added.

However, Mr. Mishra also pointed out that the practical impact of the measure would largely depend on the investigation mechanism and enforcement framework, which he said the government would lay out in the Procedure Manual.