The Federation of Indian Chambers of Commerce and Industry (FICCI) on 9 July called on the United States Trade Representative (USTR) to abandon its proposed 12.5% across-the-board tariff on Indian imports, arguing that a targeted, evidence-based approach would be far more effective in tackling forced labour concerns than blanket duties applied uniformly across all sectors and supply chains.

What FICCI Told the USTR Hearing

Presenting Indian industry's position at a USTR Section 301 hearing in Washington, FICCI representative Poornima Shenoy said Indian businesses fully back the goal of eliminating forced labour from global supply chains — but challenged the logic of a uniform tariff that treats every sector identically regardless of its actual risk profile.

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

She noted that Indian exporters have made substantial investments in responsible sourcing, supply chain due diligence, traceability, and environmental, social and governance (ESG) compliance — driven not just by regulation but by the direct demands of global buyers. 'Responsible business has become a commercial necessity,' she said.

The Case Against Economy-Wide Tariffs

Shenoy argued that the proposed measure applies a broad brush to a problem that is inherently sector-specific. 'Supply chains are not identical. They differ in governance, sourcing practices and compliance mechanisms,' she told the hearing.

'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,' she said.

FICCI also pushed back against the suggestion that the absence of a single dedicated legislative mechanism equates to weaker labour protections. Shenoy said India already operates under 'a comprehensive legal and institutional framework to protect labour rights,' backed by labour laws, enforcement mechanisms, inspections, and judicial remedies.

Compliance Layers Already in Place

According to Shenoy, Indian exporters supplying the United States already function under extensive compliance systems mandated by American companies and multinational brands. These include supplier audits, 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.'

Impact on US Businesses and Consumers

Shenoy warned that additional tariffs would carry unintended consequences for American stakeholders as well. 'An additional tariff will increase costs not only for Indian exporters, but also for US manufacturers, importers, retailers and ultimately American consumers,' she said.

She pointed out that many US industries rely on long-established sourcing relationships with Indian suppliers precisely because of their quality, reliability, and compliance track record. '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.

The Broader India-US Trade Context

FICCI described the India-US economic partnership as 'strong and resilient,' with increasingly complementary supply chains. The chamber urged the USTR to reconsider the proposed tariffs in light of India's legal safeguards, existing industry compliance mechanisms, and the potential disruption to legitimate bilateral trade. This comes amid broader US scrutiny of import supply chains under Section 301, a trade law that allows the administration to investigate and respond to unfair trade practices — a tool that has been deployed with growing frequency since 2018.