India must challenge USTR's proposed 12.5% tariff on India under Sec 301 investigations: GTRI

New Delhi: The proposed 12.5 per cent tariff on India by the US Trade Representative (USTR) under Section 301 investigations goes beyond the scope of the provision, and New Delhi should challenge the ambit of the probe, think tank GTRI said on Wednesday.

The 12.5 per cent tariff exceeds the USA's WTO commitment.

The US Trade Representative has proposed to impose 12.5 per cent additional duties on 54 countries, including India, for failing to prohibit the import of goods produced with forced labour.

The action follows investigations launched against 60 countries over what the USTR described as their failure to impose and effectively enforce bans on imports made with forced labour.

"The current investigation exceeds the scope of Section 301, which deals with market-access barriers faced by the US firms in the country being investigated and not what it imports and from where", the Global Trade Research Initiative (GTRI) said.

It added that the investigation is not based on allegations that Indian exports are produced using forced labour. Rather, the USTR action focuses on whether countries prohibit imports made with forced labour in third countries.

GTRI founder Ajay Srivastava said India must argue that the United States is attempting to impose its preferred import-control framework on other countries through unilateral trade measures, which is outside the scope of section 301.

"India may also argue that concerns regarding forced labour, particularly in countries such as China, are often product-specific and that the US itself remains a major importer of many of the products at issue. Hence, broad country-wide tariff actions are an inappropriate response when the problem could be limited to a few products," he said.

GTRI also views these tariffs as part of a broader effort by Washington to increase pressure on India, as both sides are negotiating a bilateral trade agreement.

India should be prepared for additional Section 301 tariffs in areas such as excess capacity, it said.

THE ISSUE

The Office of the United States Trade Representative (USTR) launched two separate Section 301 investigations on March 11 and 12, 2026, covering 60 economies over concerns related to forced labour and excess industrial capacity.

USTR has now issued its findings in the forced labour investigation and proposed additional tariffs on imports from 54 economies.

The proposal includes a 10 per cent tariff on imports from Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan, and a 12.5 per cent tariff on imports from 48 other economies, including India and China.

Pakistan and Indonesia are India's competitors in the trade front.

The measure remains a proposal and has not yet been finalised.

Lower tariffs have been proposed for textiles, although specific rates have not yet been finalised.

The proposal has now entered the consultation phase. Interested parties can submit requests to appear at hearings and summaries of testimony by June 22, 2026, while written comments are due by July 6.

USTR is scheduled to hold hearings on July 7.

A final decision is expected in late June or July, potentially before the expiry of the temporary Section 122 tariffs (10 per cent) on July 24, 2026.

Once finalised, the tariffs could take effect almost immediately.

The investigation is not based on allegations that Indian exports use forced labour, but on whether India restricts imports linked to forced labour in third countries.