India: 45% of exports to US exempt from new 10% forced labour tariffs

The remaining 55% will attract the new 10% ‘forced labour’ tariffs, though at a lower rate than most other countries investigated by the U.S.

Published: July 25, 2026 05:38 pm IST — NEW DELHI By T.C.A. Sharad Raghavan

The Indian government announced on Saturday that approximately 45% of India’s exports to the United States will remain outside the scope of the new 10% tariff imposed by Washington. The government also confirmed that it continues to engage with the U.S. regarding a quota-based system for India’s textile exports.

Background of the Tariff

On July 23, the Office of the U.S. Trade Representative (USTR) released the final findings of its investigation into whether U.S. trade partners were doing enough to prevent imports of goods made using forced labour. As a result, the U.S. decided to levy a 10% tariff on 17 economies, including India.

Key details of the tariff structure:

• India and 16 other economies face a 10% tariff.
• Five economies — the European Union, Taiwan, Japan, Korea, and Switzerland — will receive a lower effective tariff rate.
• 38 other countries investigated will face a higher tariff than India’s.

The Ministry of Commerce and Industry noted that the final 10% tariff is lower than the initially proposed 12.5% on India and some other nations.

India’s Engagement with the U.S.

“The Government of India remained closely engaged with the USTR throughout the investigation through detailed written submissions and in-person consultations, including participation in public hearings,” the Ministry stated.

It added: “As a result of these sustained efforts, India has been placed in the lower tier of additional tariffs under the final measures, providing a relative advantage to Indian exports in key sectors.”

Exemptions and Scope

The Ministry highlighted that a “substantial share” of India’s exports to the U.S. currently attract zero additional duties, including:

• Generic pharmaceuticals
• Smartphones
• Certain other specified products

These products continue to remain outside the scope of the additional 10% duty.

Additionally, products already covered by U.S. measures under Section 232 of the U.S. Trade Expansion Act — such as steel, aluminium, and auto parts — are not subject to the additional 10% duty. The Ministry noted that Section 232 tariffs, levied last year and ranging between 25–50%, are applied equally to nearly all countries, thereby not putting India at a disadvantage.

“On account of these exemptions, an estimated 45% of India’s exports to the U.S. remain outside the purview of the additional 10% Section 301 duty,” the statement said.

Impact on Remaining Exports

The Ministry acknowledged that the remaining 55% of India’s exports will attract the additional 10% duty. However, it emphasised that India’s “tariff incidence is comparatively lower than that for most other economies covered by the investigation.” Out of the 60 countries investigated, India’s tariff is lower than that of 38 other countries.

Textile Sector and Bilateral Trade Agreement

In its report, the USTR established a “textile mechanism” in the form of tariff-rate quotas (TRQs) for Bangladesh, Cambodia, Indonesia, and Malaysia. This mechanism aims to encourage these countries to import U.S. cotton and textile goods, “in order to reduce reliance on inputs from other sources that are more likely to contain forced labour inputs.”

India was not included in this mechanism. However, the Ministry stated that India continues working with the U.S. government regarding its textile exports.

“India continues to engage with the U.S. on this matter as part of the ongoing negotiations for the India-U.S. Bilateral Trade Agreement (BTA),” the Ministry said, noting that the textile-specific mechanism “is yet to be established and operationalised.”

The government “remains committed” to working with the U.S. towards the early conclusion of the India-U.S. BTA, the Ministry added.