India asks US to drop proposed 12.5% tariff, pushes for bilateral trade negotiations

INdia has asserted that merchandise issues with the US should be resolved through and through isobilateral merchandise negotiations instead than unilateral measures, urging the USTR to reconsider its proposed 12.5 per cent tariff, citing inconsistencies in its Section 301 investigation into forced labour concerns.Participating in the public hearing, Joint Secretary in Department of Commerce Brij Mohan Mishra submitted that in light of India's genuine engagement on forced labour issues, it strongly expresses its concerns at the USTR's (US Trade Representative) determination.India takes the elimination of forced labour seriously as a constitutional obligation, and as a matter of international law and principle."India would like to highlight its concerns with the USTR's report and findings against India," he said.Also Read | India-US trade deal talks: India wants preferential access through US deal, says Piyush GoyalThe USTR has not satisfied the relevant legal standards under Section 301(d) of the Trade Act. A mere absence of a forced labour import prohibition without evidentiary basis of other statutory requirements cannot be construed as unreasonable under Section 301, he added.The USTR determination does not provide a rationale for countrywide tariffs and impermissibly clubs 46 economies (including India) into a single category, according to the written transcript of the hearing, held on July 8 and published on the USTR website.The USTR's Section 301 investigation report concerns the failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labour.India has stated that the adopted methodology is particularly flawed as the determination is based on case studies of a handful of economies and relied on broad trade patterns.The report, he said, relies on broad data and it presupposes that an economy's imports flagged for this stuff involving imports made with forced labour are exported to the US without providing any sector- or country-specific evidence and actual linkages with forced labour.In relation to India, there is inadequate and insufficient evidence that lack of forced labour import ban causes an unfair competitive advantage to the detriment of the American industry, he said."In conclusion, it is submitted that the USTR reconsider the imposition of tariff in light of the identified inconsistencies in the report in the Federal Register notice. We ask any trade problems be addressed within the framework of the India-US bilateral trade negotiation, not through unilateral measures such as this investigation," he added.India remains willing to engage constructively with the USTR through consultation and dialogue on any specific concern.Making submissions on behalf of Agricultural and Processed Food Products Export Development Authority (APEDA), Shreyans Gupta, First Secretary in the Embassy of India in Washington, DC, said that the export promotion body objects to the USTR's observations on the import of rice allegedly made with forced labour into India and the alleged impact on such imports in distorting the competitive conditions for the export and domestic sale of rice produced in the US.It is important to note that India's imports of rice are very small and that caters to targeted demands of specific and niche rice varieties.Gupta said that the overall value of rice imported into India in relation to the value of rice exported from India to the US is not even three per cent.He added that there are regulatory checks in place that prevent exports from India of imported rice that have been produced with forced labour.Export of rice from India to the US is allowed only from the rice mills and processing units registered with the agriculture ministry."For these reasons, the present investigation against India may be rescinded without prejudice," Gupta said requesting exemption for Indian rice from the proposed duty if the proceedings continue.Industry chamber Ficci has submitted that the proposed additional tariff deserves careful reconsideration."An additional tariff will increase costs not only for Indian exporters, but also for US manufacturers, importers, retailers, and ultimately, American consumers," the chamber said adding higher tariffs will raise costs for businesses that already follow compliance standards.It urges that the proposed additional tariffs be reconsidered in light of India's legal and regulatory safeguards, the extensive compliance mechanisms adopted by Indian industry, and the potential implications for legitimate trade and resilient US-India supply chains.CII too has submitted that the proposed 12.5 per cent additional tariff is neither supported in the evidence presented, nor likely to advance the stated policy goal.The USTR report does not establish that India's policy framework burdens US commerce, the chamber said.The USTR launched two separate Section 301 investigations on March 11 and 12, 2026, covering 60 economies over concerns related to forced labour and excess industrial capacity.On June 3, the USTR issued its findings in the forced labour investigation and proposed additional tariffs on imports from these economies.The proposal includes a 10 per cent tariff on imports from Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan, and a 12.5 per cent tariff on imports from 54 other economies, including India and China.The measure remains a proposal and has not yet been finalised.The USTR will consider these comments and testimonies before taking a final decision on the proposed tariffs.