New Delhi: The United States has imposed a 10% tariff on imports from India under a Section 301 investigation into forced labour practices, a move that comes after months of scrutiny but is being viewed as relatively favourable for New Delhi compared to earlier expectations. The tariff, announced by the Office of the US Trade Representative (USTR), is lower than the previously proposed 12.5% levy and places India in the same category as Pakistan, Sri Lanka, Bangladesh and several other Asian and Latin American nations.
The action follows a months-long investigation launched under Section 301 of the US Trade Act of 1974, which empowers Washington to impose retaliatory trade measures against countries it believes are engaged in unfair trade practices. According to the USTR, the tariffs target countries that have failed to effectively restrict imports of goods allegedly produced using forced labour.
US Trade Representative Jamieson Greer said the decision was aimed at addressing both human rights concerns and trade distortions. He added that the measure would encourage trading partners to strengthen and effectively enforce laws prohibiting forced labour-linked imports.
Although the tariff represents an additional trade barrier for Indian exports, the final rate is lower than what had initially been proposed, offering some relief to Indian exporters. During the public consultation process, the Government of India and several industry organisations strongly defended the country’s labour standards, highlighting constitutional provisions that explicitly prohibit forced labour and citing various legal safeguards already in place.
The newly announced tariff replaces the temporary 10% global tariff introduced by the Trump administration in February, which has now expired. Unlike the earlier measure implemented under Section 122, tariffs imposed under Section 301 do not have a fixed expiry date and can remain in force indefinitely following a formal investigation.
The development comes even as India and the United States continue negotiations on a broader bilateral trade agreement aimed at expanding economic cooperation. Earlier this year, both countries agreed on a framework under which tariffs on Indian exports were expected to be reduced from an effective 50%, including a 25% penalty linked to India’s imports of Russian oil, to 18%. In return, India proposed increasing imports of American goods worth $500 billion over five years while also expanding market access for selected US products.
Commerce Minister Piyush Goyal had earlier stated that India was willing to accept the proposed 18% tariff because it would still provide Indian exporters with a competitive edge over many neighbouring and Southeast Asian economies. However, uncertainty emerged after the US Supreme Court struck down the Trump administration’s global reciprocal tariff framework, leaving questions over how the proposed arrangement would eventually be implemented.
Another issue that remains under discussion is that India continues to face a separate Section 301 investigation concerning alleged excess manufacturing capacity. This distinguishes India from countries such as Pakistan and Sri Lanka, which are currently subject only to the forced labour-related probe. Trade experts believe the outcome of this second investigation could significantly influence India’s long-term competitiveness in the US market.
Mark Linscott, Senior Adviser at the Asia Group and former Assistant US Trade Representative for South and Central Asia, noted that India and the United States appear to be close to finalising the substance of an interim trade agreement. However, he suggested that New Delhi is seeking greater clarity on whether India will ultimately receive a more favourable tariff regime than competing exporting nations before concluding the deal.
Despite the latest tariff announcement, India remains committed to strengthening its trade partnership with the United States while protecting the interests of its exporters. With bilateral negotiations continuing and India’s legal framework against forced labour already in place, policymakers are expected to work towards securing improved market access and ensuring that Indian businesses remain competitive in one of the country’s most important export destinations.
