To eliminate forced labour, evidence-based approach more effective than economy-wide tariff: FICCI tells USTR

Washington, July 9 (IANS) The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the United States to abandon its proposed across-the-board tariff on Indian imports, arguing that a targeted, evidence-based approach would be far more effective in addressing forced labour concerns than blanket duties covering all sectors.

Presenting Indian industry’s position before a US Trade Representative (USTR) Section 301 hearing on Wednesday (local time), FICCI representative Poornima Shenoy said Indian businesses fully support efforts to eliminate forced labour from global supply chains but questioned the rationale for imposing a uniform 12.5 per cent tariff across all products and industries.

“Indian industry fully supports the objective of eliminating forced labour from global supply chains. This is a shared goal,” Shenoy told the hearing.

She said Indian businesses have made significant investments in responsible sourcing, supply chain due diligence, traceability and environmental, social and governance (ESG) compliance, not merely because regulations require them, but because global customers demand them.

“Responsible business has become a commercial necessity,” she said.

Shenoy argued that the proposed tariff adopts an overly broad approach by treating all industries alike despite major differences in supply chains and compliance mechanisms.

“Our first concern is that the measure adopts a broad-based approach that applies across all sectors and products, irrespective of the individual risk profile in the supply chain,” she said.

“Supply chains are not identical. They differ in governance, sourcing practices and compliance mechanisms.”

“If the objective is to eliminate forced labour, then a targeted, evidence-based and risk-based approach is likely to be far more effective than an economy-wide tariff.”

FICCI also rejected suggestions that the absence of a specific legislative mechanism should be interpreted as weaker labour protections.

Shenoy said India already has “a comprehensive legal and institutional framework to protect labour rights,” backed by labour laws, enforcement mechanisms, inspections and judicial remedies.

She told the committee that Indian exporters supplying the United States already operate under extensive compliance systems required by American companies and multinational brands.

According to Shenoy, these include supplier audits, due diligence, ethical sourcing standards, worker grievance mechanisms, corrective action processes, traceability systems and continuous monitoring.

“In many cases, compliance is driven as much by buyer requirements as by domestic regulation,” she said.

“These multiple layers of oversight already exist. They strengthen transparency and accountability across supply chains.”

Shenoy also warned that additional tariffs would have unintended consequences for American businesses.

“An additional tariff will increase costs not only for Indian exporters, but also for US manufacturers, importers, retailers and ultimately American consumers,” she said.

“Many US industries rely on long-standing sourcing relationships with Indian suppliers because they deliver products of quality and reliability and ensure full compliance.”

“Higher tariffs for these established supply chains will raise costs for businesses that already follow compliance standards. It will not help in identifying goods produced with forced labour. It would simply make trusted supply chains more expensive.”

Shenoy said India and the United States had built “a strong and resilient economic partnership” with increasingly complementary supply chains.

She urged the USTR to reconsider the proposed tariffs in light of India’s legal safeguards, the compliance mechanisms already adopted by Indian industry and the potential impact on legitimate trade between the two countries.

–IANS

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