The Confederation of Indian Industry (CII) on Wednesday urged the United States Trade Representative (USTR) to pursue compliance-based bilateral engagement rather than imposing additional tariffs on Indian imports, arguing at a Section 301 public hearing in Washington that punitive trade measures would undermine one of the world's fastest-growing bilateral economic partnerships without addressing the stated concern over forced labour.

CII's Core Argument at the USTR Hearing

Presenting CII's position at the hearing, Shuchita Sonalika said the proposed 12.5 per cent tariff on Indian imports was 'neither supported in the evidence presented nor likely to advance the stated policy goal.' She argued that such a measure would instead penalise industries already compliant with international labour standards, raise costs for US manufacturers, and disrupt established supply chains.

'We believe compliance-based cooperation, not punitive tariffs, is the most effective pathway forward,' Sonalika told the hearing.

She called on the USTR to refrain from imposing tariff or non-tariff measures on Indian industry and to instead deepen engagement through the existing India-US Trade Policy Forum, which was established in 2005 and has been revived in recent years as both countries work to expand commercial ties.

India's Existing Compliance Architecture

Sonalika highlighted that Indian companies already operate under comprehensive compliance frameworks, including corporate codes of conduct, supplier codes, ethics policies, and environmental, social and governance (ESG) standards. She pointed specifically to the Securities and Exchange Board of India's (SEBI) Business Responsibility and Sustainability Reporting (BRSR) framework, which applies to India's top 1,000 listed companies, as well as the BRSR Lite framework introduced for small and medium enterprises.

She also noted CII's ongoing collaboration with the International Labour Organization (ILO) and the United Nations Development Programme (UNDP) on responsible business conduct, and said Indian industry would welcome deeper cooperation with US authorities to further strengthen these systems.

Response to USTR's Direct Question

A USTR official asked how exempting Indian exports from additional duties would encourage countries under investigation to eliminate unfair labour practices. Sonalika replied directly that 'compliance and cooperation-based mechanisms would be far more effective than the application of tariffs,' adding that India fully supports the elimination of forced labour from global supply chains.

She argued that India's existing legal and institutional framework already prohibits forced labour, and that exporters function under rigorous compliance systems driven by multinational buyers, international certification bodies, and domestic regulatory requirements — providing, in her view, a stronger foundation for bilateral cooperation than unilateral trade action.

Broader Trade Context

The Section 301 hearing is part of a US review process that can result in additional duties on imports from countries deemed to have unfair trade practices. The proposed 12.5 per cent tariff has drawn concern from Indian industry at a time when the US-India bilateral trade relationship is expanding rapidly across goods, services, and technology sectors.

This comes amid broader US-India trade negotiations, with both governments working toward a bilateral trade agreement. How the USTR weighs CII's compliance-first argument against domestic political pressure on supply-chain labour standards could shape the next phase of that negotiation.