Indian industry has mounted a coordinated pushback against a proposed U.S. tariff on Indian goods, urging the Office of the U.S. Trade Representative (USTR) to abandon its plan to impose an additional 12.5% duty on Indian exports over allegations tied to forced labour. The appeal came in written submissions filed as part of an ongoing USTR public hearing held July 7–9, with both leading industry bodies and the Indian government separately urging Washington to reconsider.
What's Behind the Proposed Tariff
The tariff traces back to a pair of Section 301 investigations the USTR launched on March 11 and 12, examining 60 economies over concerns linked to forced labour and excess industrial capacity. On June 3, the USTR released its findings on the forced labour probe and proposed fresh tariffs on 54 economies, including India. Indian exports to the U.S. are currently already subject to a temporary 10% reciprocal tariff, meaning the new proposal would stack an additional 12.5% on top of that.
Industry Bodies Push Back Hard
The Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) both testified against the plan. CII stated plainly that "there is no credible evidentiary basis linking Indian production to the use of forced labour inputs." FICCI, meanwhile, argued that a blanket tariff fails to distinguish between compliant and non-compliant supply chains, saying a uniform approach "does not distinguish between supply chains that may warrant heightened scrutiny and those that already operate within well-established compliance systems."
Representing CII, Shuchita Sonalika laid out a three-part case: that India already maintains a comprehensive legal and institutional framework against forced labour — including constitutional protections, the Bonded Labour System (Abolition) Act, modern labour codes, and criminal penalties — that none of India's major manufactured-goods export categories appear on the U.S. Trafficking Victims Protection Reauthorization Act list, and that the USTR's own economic analysis failed to establish that India's policies actually burden U.S. commerce. She called the proposed 12.5% duty "not warranted," warning it would "penalise a compliant industry without advancing the stated policy goal."
FICCI's Poornima Shenoy took a similar line, emphasizing that Indian exporters already operate under extensive compliance systems — supplier audits, due diligence processes, ethical sourcing standards, worker grievance mechanisms, and traceability systems — many of which are required directly by the American companies and multinational brands that source from them. "Many U.S. industries rely on long-standing sourcing relationships with Indian suppliers specifically because those suppliers deliver quality, reliability, and full compliance," she said, warning that raising tariffs on already-compliant supply chains would simply raise costs without improving labour standards. Both CII and Sonalika stressed that "compliance and cooperation-based mechanisms would be far more effective" than blanket duties.
India's Government Weighs In Directly
New Delhi has also formally responded to the USTR at the government level, separate from industry testimony. In its official submission, India argued that the USTR's Section 301 report "failed to identify or substantiate any specific act, policy or practice that would qualify as 'unreasonable' under the law" — either for India specifically or for any of the other economies under review. The Indian government has also offered to engage directly with the USTR in dialogue to resolve any specific concerns, rather than proceeding straight to punitive tariffs.
The Bigger Picture: Protecting a Resilient Trade Relationship
Beyond disputing the forced-labour allegations themselves, Indian industry representatives framed their appeal around the broader stakes of the U.S.-India trade relationship. Sonalika highlighted CII's ongoing collaboration with the International Labour Organisation and the UN Development Programme on responsible business practices, noting Indian companies already maintain documented codes of conduct and ESG frameworks. Shenoy closed her testimony by describing India and the U.S. as having built "a strong, resilient economic partnership," with supply chains that have grown increasingly complementary over time — and urged the USTR to weigh that relationship, along with India's existing legal safeguards and compliance systems, before moving forward with new duties.
Industry bodies collectively urged the USTR to instead use the existing India-U.S. Trade Policy Forum as the venue to resolve any outstanding concerns, rather than imposing tariffs unilaterally. With the public hearing period closing July 9, attention now turns to whether the USTR will revise its proposal in light of the pushback — or proceed with duties that industry groups warn would raise costs for U.S. manufacturers, retailers, and consumers alongside Indian exporters.