India Bans Imports of Forced Labour Goods Ahead of US Trade Ruling

The Indian government has issued a notification prohibiting the import of goods manufactured using forced labour, a move that aligns with international labour standards and comes as the United States finalises its investigation into trade practices.

The Ministry of Commerce and Industry announced on Monday that goods produced wholly or partially through forced labour cannot be imported into India. The notification defines forced labour in line with the International Labour Organization's Forced Labour Convention, 1930 (No. 29), as work exacted under threat of penalty and without voluntary consent.

This decision follows a draft report from the U.S. Trade Representative's office under Section 301 of the Trade Act of 1974, which found that India and 53 other countries had failed to effectively enforce prohibitions on importing goods made with forced labour. The U.S. has proposed a 12.5% tariff on imports from these countries.

Commerce Secretary Rajesh Agrawal confirmed on July 13 that India has submitted its objections to the U.S. and protested the proposed tariffs. The pending final decision has created uncertainty around a potential interim trade agreement between India and the U.S.

Commerce Minister Piyush Goyal and Mr. Agrawal have indicated that India will only sign a trade deal if it secures a comparative advantage over competitors. A key factor is the outcome of the U.S. investigations, including a separate probe into whether trade partners are using excess capacity to export to the U.S., harming the American economy. The draft report of that investigation has not yet been released.

The notification empowers the central government to specify goods that will be prohibited from import. The procedure for investigating forced labour in supply chains will be detailed in the Handbook of Procedures, 2023, as noted by the ministry.

Experts see the ban as a significant policy shift. Manoj Mishra, Partner and Tax Controversy Management Leader at Grant Thornton Bharat, said the move strengthens India's regulatory framework on ethical sourcing amid heightened global scrutiny of supply chains. However, he noted that the practical impact depends on the enquiry mechanism and implementation framework outlined in the Handbook of Procedures.

India has historically relied on domestic labour and criminal laws to address forced labour. The new trade measure aligns with international standards and signals India's commitment to combating forced labour in global trade.