India's Industry Fights US Tariff Threat Over Forced Labor Claims

Indian industry groups and government officials are pushing back hard against a new proposal by the United States Trade Representative (USTR) to slap tariffs of up to 12.5% on most Indian goods. They argued in public hearings this week (July 7-9, 2026) that these proposed 'blanket duties' lack proper evidence, would unfairly target India, and risk damaging the strong trade links between the two nations over unproven 'forced labor' claims. This comes after the USTR launched a Section 301 investigation in March 2026 against 60 economies, including India, focusing on their alleged failure to enforce bans on imports made with forced labor. The Federation of Indian Chambers of Commerce and Industry (FICCI) and the Confederation of Indian Industry (CII), along with government representatives, insisted that India has robust laws and systems in place to prevent forced labor and that the USTR approach is inconsistent. They highlighted that applying wide-ranging tariffs without specific proof for each industry would only increase costs for American businesses and consumers who rely on established US-India supply chains. This recent development adds another layer of complexity to US-India trade relations, which have seen previous tariff disputes and an interim trade agreement in February 2026 that aimed to reduce duties. The USTR is expected to make a final decision soon, with public hearings just concluding. Indian officials have urged the US to address any specific concerns through ongoing bilateral talks under the existing Trade Policy Forum (TPF) or the broader Bilateral Trade Agreement (BTA) negotiations, rather than resorting to unilateral tariffs. With temporary Section 122 tariffs expiring on July 24, 2026, the global trade community is watching closely to see if these proposed Section 301 tariffs will become a permanent fixture, potentially reshaping global supply chains and impacting a wide array of products.