India formally challenged the U.S. Trade Representative's (USTR) proposed Section 301 tariff framework on 9 July 2025, arguing before a public USTR hearing that the plan contradicts its own stated objective of eliminating forced labour by carving out exemptions for certain products while simultaneously seeking sweeping import restrictions on countries including India. New Delhi urged Washington to pursue bilateral trade negotiations rather than economy-wide punitive measures.

India's Core Argument at the Hearing

The case was presented by Dr. Brij Mohan of the Ministry of Commerce and Industry during the USTR's public hearing on 8 July, following a USTR official's questions about India's earlier written submission. Dr. Mohan clarified that India's objection was not to exemptions per se, but to what New Delhi viewed as methodological inconsistencies in the USTR's own framework.

He pointed out that the USTR had itself proposed exemptions for products that cannot be grown or produced in sufficient quantities in the United States or sourced from alternative suppliers. 'What we submitted... is inconsistent with the overall approach,' he said, arguing that such carve-outs undermine the rationale for imposing economy-wide tariffs in the first place.

The Textile Provision Under Scrutiny

Dr. Mohan also drew attention to a provision in the Federal Register notice that would allow reduced tariff treatment for certain textile and apparel imports contingent on the use of U.S.-origin textile inputs. Under this mechanism, trading partners that source American raw materials would be permitted to export corresponding volumes of finished goods to the United States at lower tariff rates.

He argued that this arrangement rewards sourcing decisions on commercial grounds rather than addressing whether the products in question are actually connected to forced labour. It effectively creates an arbitrary incentive for manufacturers to use American raw materials while allowing corresponding exports to qualify for preferential treatment, he said.

Agricultural Exemptions Flagged as Contradictory

Among the most pointed critiques, Dr. Mohan highlighted exemptions granted to agricultural commodities including coffee, vanilla, cinnamon, cloves, and several fruits. He noted that some of these products appear on the U.S. Department of Labour's own list of goods associated with child labour or forced labour risks — including coffee and cocoa.

'This creates a contradiction and inconsistency in the US's own approach,' he said, arguing that commercial considerations behind the exemptions weaken the USTR's case that economy-wide import restrictions are necessary to eliminate forced labour from international supply chains.

India Calls for Bilateral Trade Dialogue

Despite the sharp critique, Dr. Mohan reiterated India's willingness to engage constructively with Washington. 'We remain open to dialogue and cooperating to resolve any specific concerns that may arise from India's imports and exports involving any such issues,' he said. He added that such matters should be addressed 'in the framework of Indian US... Trade negotiation, and not in this investigation.'

India's written submission to the USTR had earlier contended that the proposed exemptions 'do not reconcile with and undermine' the USTR's stated position that eliminating forced labour is both 'an economic and moral imperative' and that import prohibitions are a key instrument for achieving that goal. The hearing exchange signals that India intends to press this contradiction formally as US-India trade talks continue.