America imposed 10% extra tariff on India: Action on goods made from forced labour, action on 60 countries

America has announced to impose 10% extra tariff on goods imported from India. This decision came into effect from Friday. On the instructions of US President Donald Trump, the US Trade Representative (USTR) has taken action against 60 countries regarding the import of goods made with forced labor. America has imposed additional tariffs of 10% to 12.5% ​​on these countries. India is among the 17 countries on which an additional 10% tariff has been imposed. Whereas 12.5% ​​additional tariff has been imposed on the remaining 43 countries. America has taken this action under Section 301 of the Trade Act-1974. Apart from India, many countries including Britain, Canada, Indonesia, Bangladesh, Mexico, Pakistan and Sri Lanka have been kept in the 10% tariff group. America says that these countries have banned goods made with forced labor or have taken steps towards doing so. What is Section 301, under which America increased the tariff? Section 301 is a provision of America’s Trade Act-1974. Under this, the US government gets the right to take action against any country if its trade policies are considered unfair, discriminatory or harmful to American businesses or industries. This action could include imposing additional tariffs, banning imports, or other trade restrictions. The responsibility for investigation lies with the US Trade Representative (USTR). During the investigation, answers are sought from the concerned country and if necessary, talks are also held. After this, the action comes into effect with the approval of the US President. Which sectors of India may be most affected? America is India’s largest export market. In such a situation, the additional 10% tariff may have a greater impact on those sectors which are more dependent on the American market. These include textiles and garments, gems and jewellery, leather products, agriculture and food products, engineering goods, chemicals and some manufacturing items. Due to the imposition of additional tariffs, Indian products will become expensive in the American market. This may lead buyers to look for alternatives from other countries or increase pressure on Indian exporters to reduce prices. This is likely to impact orders, profits and competition. What is forced labour, on which America is taking strict action? Forced labor means such labor in which a person is made to work against his will. This includes situations like threats, debt, violence, confiscation of documents, withholding of salary or not giving freedom to leave the job. The International Labor Organization (ILO) considers this a serious violation of human rights. America says that if goods imported from any country are found to be linked to forced labor, then additional tariffs or import restrictions can be imposed on them. Its aim is to put pressure on companies not to use forced labor in their supply chains. In the past too, action has been taken against many countries and industries. In the last few years, America has taken action against many countries on the issue of forced labour. Especially strict import restrictions were imposed on cotton, tomatoes, solar panels and their related products coming from Xinjiang region of China. Apart from this, industries like sea food, palm oil, rubber, cocoa, textile and mining have also been under US scrutiny. Why did India get 10% tariff instead of 12.5%? Initially there was a proposal to impose an additional 12.5% ​​tariff on India. However, later, after some policy reforms related to labor standards and supply chain monitoring by the Indian government and continuous negotiations with the US, it was reduced to 10%. India revised its foreign trade policy on June 14 after the proposed tariffs were announced in June, the Fed note said. The US believed that India had taken some positive steps towards monitoring labor rights, following rules and increasing transparency in the supply chain. On this basis, relief of 2.5% was given in the proposed tariff. The continued imposition of 10% tariff means that India has not got full exemption. That means America still wants India to implement labor standards and rules related to forced labor more effectively. However, 10% tariff instead of 12.5% ​​will reduce the additional cost burden on Indian exporters.



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