Amid new US tariff threat, India moves to ban imports made using forced labour

The Commerce and Industry Ministry on Tuesday (July 14, 2026) restricted the import of goods manufactured using forced labour. This comes days after the United States Trade Representative (USTR) proposed 12.5 per cent tariffs on India, connected to the issue. In March, the US had launched two Section 301 investigations against India and later imposed fresh tariffs on June 3 following the result of its first probe, which discovered that India failed to “effectively enforce” a forced labour import prohibition, which had reportedly affected US commerce.

In an order dated July 13, the Directorate General of Foreign Trade (DGFT) has added a new paragraph in the Foreign Trade Policy (FTP) related to “forced labour”, underscoring that the import of goods produced or manufactured partially or completely using forced labour is “prohibited”.

“The Central Government may, from time to time, specify, by notification, the goods whose import shall be prohibited under this paragraph, having regard to the findings of such enquiry or such other material as it may consider appropriate. The procedure for conducting an enquiry by the DGFT into the use of forced labour. The provisions of this notification shall come into effect after the expiry of 30 days from the date of its publication in the Official Gazette,” the notification read.

A senior government official told The Indian Express that existing regulations already contain provisions to address issues such as forced labour, but the July 13 notification makes those powers explicit. The official said the use of "suo motu" makes it clear that authorities can initiate action on their own without waiting for a formal complaint. "We previously had these powers implicitly, but they we are not dependent on a complaint to take action. This could also have implications for the ongoing trade discussions," the official said, hinting at the ongoing negotiations on the proposed trade deal with the United States.

India on elimination of forced labour

India has also sought a review of the proposed 12.5 per cent US tariffs, arguing that the findings of the Section 301 investigation are inconsistent. During a public hearing last week, Joint Secretary in the Department of Commerce Brij Mohan Mishra said that India considers the elimination of forced labour a constitutional responsibility as well as an obligation under international law and accepted global principles.

Under internationally recognised standards, forced labour refers to any work or service extracted from a person under the threat of punishment and carried out without the person's voluntary consent. Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, said the move to prohibit imports of goods produced through forced labour represents a major shift in India's trade policy framework. He stated that the FTP now included a dedicated trade measure aligned with international standards under the ILO Forced Labour Convention.

“Announced amid heightened global scrutiny of supply chains and the ongoing USTR Section 301 investigation, the move strengthens India’s regulatory framework on ethical sourcing. However, its practical impact will largely depend on the enquiry mechanism and implementation framework to be prescribed under the Handbook of Procedures, which will determine the scope of compliance for importers,” Mishra said.