Subject: GS 3: Economy
Context: Recently, the Government of India has amended the Foreign Trade Policy (FTP) to prohibit the import of goods manufactured wholly or partly through forced labour.
- The move comes amid the United States Trade Representative (USTR) proposing a 12.5% tariff on Indian exports under a Section 301 investigation concerning India’s enforcement of forced labour-related trade measures.
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Key Highlights
- Import Prohibition: The Directorate General of Foreign Trade (DGFT) has inserted a new provision in the Foreign Trade Policy (FTP) prohibiting the import of goods produced or manufactured wholly or in part through forced labour.
About India’s Foreign Trade Policy (FTP)
- FTP aims to promote exports, facilitate imports, improve ease of doing business, and enhance India’s integration with global value chains.
- Legal Framework: It is formulated by the Central Government under the Foreign Trade (Development and Regulation) Act, 1992, and implemented by the Directorate General of Foreign Trade (DGFT).
- Current Policy: Foreign Trade Policy 2023 adopts a dynamic and long-term framework without a fixed end date, replacing the earlier five-year policy cycle.
- Export Promotion Schemes: Provides benefits through schemes such as Advance Authorisation, Export Promotion Capital Goods (EPCG), and Duty Remission Schemes (e.g., RoDTEP and RoSCTL).
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- Government Notification: The Central Government may notify specific goods for prohibition based on the findings of an enquiry or other relevant evidence.
- Enquiry Mechanism: The Director General of Foreign Trade (DGFT) will conduct enquiries into the use of forced labour, following the procedure prescribed under the Handbook of Procedures, 2023.
What is Forced Labour?
- According to the International Labour Organization (ILO), forced labour refers to any work or service extracted from a person under the threat of penalty and without voluntary consent.
- Background: In March 2026, the United States Trade Representative (USTR) initiated two Section 301 investigations against India.
- Following the first investigation, the USTR proposed a 12.5% tariff on Indian exports, alleging that India had failed to effectively enforce restrictions on imports made using forced labour.
- The second investigation, relating to excess industrial capacity, is yet to be concluded.
About US Section 301
- Refers: Enacted under the US Trade Act of 1974, Section 301 grants the United States Trade Representative (USTR) broad authority to investigate and unilaterally respond to foreign regulatory practices deemed unjust, discriminatory, or burdensome to US commerce.
Core Mechanics of the US Section 301 Actions:
- The Enforcement Trigger: The USTR initiated this round of Section 301 tariffs after declaring that India and 53 other nations lack explicit, sweeping legal bans on importing goods produced via forced labor.
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Global Context
- United States: The USTR has initiated Section 301 investigations covering around 60 economies and has proposed tariffs on imports linked to forced labour.
- European Union: The EU has also introduced measures to restrict imports produced through forced labour.
- Global Focus: Products such as cotton, textiles, solar panels, seafood, metals, batteries, and electronics have come under increased scrutiny for potential links to forced labour, particularly in Xinjiang, China.
21 Jul 2026
