India's Ministry of Commerce and Industry notified an amendment to the Foreign Trade Policy 2023 on July 13, inserting a new Paragraph 2.20B that formally prohibits the import of goods produced through forced labour.
The notification comes directly in response to a US USTR Section 301 investigation covering approximately 60 countries, including India.
Experts say the notification establishes a legal framework rather than an immediate operational ban.
On July 13, 2026, India's Directorate General of Foreign Trade published a gazette notification that changed the country's import law for the first time on a question that has reshaped global trade enforcement across three continents. The Union government amended its Foreign Trade Policy 2023 to prohibit the import of goods that are produced, either wholly or partly, through the use of forced labour. The new provision will take effect 30 days after publication.
The notification's immediate audience was not Indian consumers or importers, it was the United States, where a final Section 301 investigation report on forced labour in global supply chains is expected before the end of July 2026.
What Has India Changed In Its Trade Policy?
The notification inserts Paragraph 2.20B into the Foreign Trade Policy 2023, empowering the Central Government to prohibit, by notification, the import of goods produced or manufactured wholly or in part through the use of forced labour.
Forced labour is defined in the notification in accordance with the ILO Forced Labour Convention, 1930 — as all work or service exacted from any person under the menace of penalty and for which the person has not offered themselves voluntarily.
The Central Government may, from time to time, specify by notification the goods whose import shall be prohibited under this provision, after considering the findings of an enquiry conducted by the DGFT or any other material considered appropriate. The DGFT will investigate allegations or evidence that specific imported goods have been produced using forced labour, and its findings will feed into government decisions on specific product bans.
Why Has The Move Come Now?
The USTR released the draft investigation report on forced labour in June 2026. Public comments on the proposal closed on July 6, and Washington is yet to take a final decision on the tariffs. The final report is expected this month, India's Commerce Secretary Rajesh Agrawal confirmed. New Delhi is demonstrating to Washington that it is building the domestic legal architecture the US has been asking trading partners to maintain.
The Section 301 investigation proposed a lower tariff of 10% on some economies, including Pakistan, Indonesia, Mexico and Canada, crediting them for imposing a 'partial regime' to prevent the import of goods made with forced labour.
Most of India's exports to the US are currently subject to a 10% tariff. The 12.5% Section 301 tariff, if applied, would come on top of that a potentially significant cost for Indian exporters in textiles, electronics, and manufacturing.
What Is The US Section 301 Investigation?
Section 301 of the US Trade Act of 1974 allows the USTR to investigate foreign trade practices that are deemed unreasonable or discriminatory and burden US commerce. USTR Jamieson Greer stated that importing goods made with forced labour creates an unfair advantage for those nations and disturbs the level playing field for US industries.
The current forced-labour investigation looks specifically at whether trading partners maintain domestic legal regimes to prevent such goods from entering international supply chains.
US authorities consider products such as cotton, textiles, solar-panel polysilicon, seafood, metals, batteries, and electronics particularly vulnerable to forced-labour risks, particularly when linked to China's Xinjiang region.
The Section 301 investigation extends this scrutiny more broadly to countries whose domestic trade law could allow forced-labour goods from third countries to transit through their markets and eventually reach the US.
Could The Change Help India Avoid Higher Tariffs?
Experts noted that the DGFT notification has come at a time when the US has proposed a 12.5% tariff on imports from India and most other countries under review, while the EU and Pakistan were proposed to face a lower 10% tariff after introducing domestic measures to prohibit imports made with forced labour.
By inserting a comparable domestic measure into its foreign trade policy, India is making the legal argument that it now belongs in the same category as the countries proposed for the lower tariff. Whether the USTR accepts that argument will depend on the final report's assessment criteria.
A framework on paper without a functioning investigative mechanism, clear evidence standards, and an enforcement track record may not satisfy US authorities looking for operational equivalence with the measures adopted by countries that received preferential tariff treatment.
How Will Importers And Exporters Be Affected?
For Indian importers, the notification creates a new compliance layer. Businesses importing goods into India may now face greater scrutiny over where their products come from and how they are manufactured.
For Indian exporters, the benefit is indirect: India is signalling to the US, the EU, and other major trading partners that its trade architecture is being aligned with international labour standards, strengthening India's hand in the ongoing Bilateral Trade Agreement negotiations with the US that aim to cover $500 billion in annual trade by 2030.
What Happens Next In India-US Trade Talks?
India's commerce secretary confirmed the final USTR Section 301 report is expected before the end of July 2026. If the report credits India's July 13 notification as sufficient domestic action to justify the lower 10% tariff treatment, the notification will have achieved its immediate diplomatic objective.
If the report finds the notification insufficient — because it lacks implementing regulations, investigative procedures, or an enforcement record — India may still face the 12.5% additional tariff while its trade negotiators argue the case in consultations.
The broader India-US trade relationship is simultaneously moving toward a Bilateral Trade Agreement, with both sides having set an ambitious 2030 target. India's July 13 notification is best understood as a floor — the minimum legal change needed to participate in the conversation — rather than a ceiling on what US negotiators will ultimately require.
