The Ministry of Commerce has added a new clause to the Foreign Trade Policy prohibiting imports of items produced using forced labour. The move comes as a response to the United States' proposed 12.5% tariff and signals a shift in India’s trade negotiations.

Key Takeaways

  • India explicitly bans imports of goods made with forced labour.
  • The decision follows the US's 12.5% tariff proposal, adding pressure in bilateral talks.
  • The new rule becomes effective after a 30‑day notice, allowing time for enforcement mechanisms.

New Delhi – On July 13, the Government of India issued an order stating that any product manufactured wholly or partly with forced labour is prohibited from import. The notification amends the Foreign Trade Policy (FTP) and mandates that importers comply within 30 days of its publication in the Official Gazette.

Background and US Tariff Context

The United States Trade Representative (USTR) launched two Section‑301 investigations against India in March and, on June 3, announced a 12.5% tariff on Indian imports. The first probe concluded that India had failed to “effectively enforce” a forced‑labour import ban, allegedly harming U.S. commerce. In response, the Indian government has moved from implicit to explicit authority, invoking a “suo motu” approach that does not rely on external complaints.

Legal Framework and Compliance Process

The Directorate General of Foreign Trade (DGFT) clarified that the amendment aligns with the International Labour Organization’s Forced Labour Convention. A senior official explained that the government now possesses a clear, written mandate to act without waiting for a grievance, strengthening India’s position in upcoming bilateral trade agreements and ensuring WTO‑compatible measures.

Expert Opinions

Manoj Mishra, Partner at Grant Thornton Bharat, described the prohibition as a “significant policy shift” that brings India’s trade rules in line with global ethical standards. Agneshwar Sen of EY India noted that the 30‑day grace period and DGFT‑administered enquiry give India flexibility to calibrate the scope and pace of enforcement. Former trade officer Ajay Srivastava of GTRI warned that the real impact will depend on how investigations are conducted, the evidence required to prove forced labour, and the specific products targeted.

Global Context and Challenges

The United States and the European Union have already imposed similar restrictions on about 60 economies, focusing on commodities such as cotton, textiles, solar‑panel polysilicon, seafood, metals, batteries and electronics—especially those linked to China’s Xinjiang region. Yet enforcement remains uneven, as many of these goods continue to flow into global markets. India’s move not only safeguards domestic labour rights but also enhances its credibility on the international stage, potentially giving it leverage in future market‑access negotiations.