Govt urges USTR to review its move to levy new tariffs

NEW DELHI: Govt has asked the US Trade Representative (USTR) to reconsider its proposal to impose 12.5% additional tariff on Indian products for allegedly failing to act against forced labour, arguing that the move does not meet legal standards, lacks country-specific analysis and fails to establish causal link between absence of import prohibitions and its impact of US business."India maintains that forced labour in global supply chains is best addressed through a combination of domestic criminal labour-law enforcement and adequate due diligence framework, which also provide for risk mitigation and remedial measures," govt said in its nine-page submission ahead of the start of hearings on Tuesday.Several Indian companies have also petitioned, which includes the likes of Reliance Industries, Alok Industries, Shahi Exports and solar manufacturers, against the move seen as a replacement for Donald Trump's reciprocal tariffs, which was declared illegal by the US Supreme Court.Interestingly, a host of Gujarat-based companies such as Parth Foods, Hanumant Foods, Maruti Exports, Rajdhani Dehydration, which supply dehydrated onions and garlics to American companies, have also cautioned against the move, arguing that it will mean higher costs for US consumers, including for seasoning.In its submission, the commerce and industry ministry has said that USTR has not satisfied the relevant legal standard under section 301(d) of the US Trade Act and has also failed to meet evidentiary requirements to establish how the absence of bans distorts market conditions and undermines profitability of compliant firms.It also said for findings to "carry legal and factual weight" there must be economy-specific evidence, which has not been undertaken by USTR. Instead, there is reliance on case studies and broad pattern of trade data."In relation to India, there is inadequate and insufficient evidence that the lack of forced labour import ban causes an alleged unfair comparative advantage to detriment of US industry. Evidence across sectors of major exports of India to the US does not suggest any linkage with forced labour inputs," govt said.Using three examples in the USTR report, it said "the determination lacks evidence regarding India's acts, policies, or practices burdening or restricting US commerce". American tobacco imports shot up from $225,000 in 2021 to $3.5 million, while those from Malawi remained zero, "indicating no adverse impact on US commerce".Similarly, it pointed out that there were no imports from Myanmar, but US was among the few countries that shipped the commodity to India. Further, it said that US cotton imports have increased from $213 million in 2021 to $392 million in 2025, while imports from China declined during this period.Get the latest business news and top stories. Download the TOI App.Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.