Bans Imports of Goods Made Using Forced Labour

Context

The Directorate General of Foreign Trade (DGFT) has amended the Foreign Trade Policy (FTP) 2023, empowering the Central Government to prohibit imports of goods produced wholly or partly using forced labour through separate notifications.

Key Legal Transformations

• Enabling Regulatory Framework: Inserts Paragraph 2.20B into FTP 2023, creating a legal framework for future targeted import bans instead of an immediate blanket prohibition.
• DGFT Investigative Authority: Authorises DGFT to initiate enquiries suo motu or on credible complaints, examine supply chains, audit importers, and recommend import restrictions.
• Formal Policy Alignment: Inserts Paragraph 11.64 under Chapter 11, adopting the International Labour Organization (ILO) Forced Labour Convention, 1930 (No. 29) definition into India's trade policy.

Core Statutory Baseline

• ILO Forced Labour Definition: Defines forced labour as work or service extracted under threat of penalty without voluntary consent.
• Operational Execution: Investigations will follow the Handbook of Procedures, 2023, with final orders issued under the Foreign Trade (Development and Regulation) Act, 1992.
• Implementation Timeline: The amendment comes into force 30 days after publication in the Official Gazette.

Strategic Challenges & Global Friction

• US Section 301 Scrutiny: The USTR has investigated 60 economies, alleging inadequate enforcement against forced-labour imports.
• Threat of Additional Tariffs: The US has proposed a 12.5% tariff on Indian exports, compared to the standard 10% tariff, if compliance is found inadequate.
• Supply Chain Vulnerabilities: Sectors such as textiles, seafood, mining, solar components, and electronics require stronger due diligence due to complex supply chains.
• Bilateral Trade Volatility: The policy change coincides with ongoing India-US Bilateral Trade Agreement (BTA) negotiations.

Way Forward

• Supply Chain Transparency: Importers should map supply chains and ensure ethical sourcing with proper documentation.
• Standardized Enquiry Guidelines: The government should issue clear evidentiary standards to ensure transparent and time-bound investigations.
• Strategic Bilateral Leverage: India can use this framework to demonstrate robust domestic enforcement and counter unilateral trade restrictions.

Conclusion

By integrating forced labour provisions into the Foreign Trade Policy, India moves beyond relying solely on criminal law to using trade-based regulatory tools. This strengthens compliance with global labour standards while enhancing India's position in international trade negotiations.