Even as India continues to engage with the United States on trade tariffs as part of the bilateral trade agreement negotiations, the Ministry of Commerce and Industry on Saturday said an estimated 45% of India’s exports to the US remain outside the purview of the additional 10% Section 301 duties imposed effective July 24. The ministry said 55% of exports will attract the additional 10% duty, which is lower than that for most other economies affected by the tariffs.

The US Trade Representative (USTR) had announced the final measures under Section 301 of the US Trade Act, 1974, on Thursday. The measures follow USTR’s investigation into the acts, policies and practices of 60 economies relating to the imposition and enforcement of prohibitions on import of goods produced with forced labour. 

A substantial share of India’s exports to the US, which currently attract zero additional duties, such as generic pharmaceuticals, smartphones and certain other specified products, continue to remain outside the scope of the additional 10% duty, the ministry statement said. Products already covered under Section 232 measures, including steel, aluminium and auto parts, are not subject to the additional 10% duty. 

India continues to engage with the US on textile-specific mechanisms as part of the India-US BTA. India has not received the textile and apparel tariff-rate quota (TRQ) exemption under the forced labour tariff. The exemption applies to specified volumes of textile and apparel exports from Bangladesh, Cambodia, Indonesia, and Malaysia that use US-origin cotton and fiber. 

By banning import of goods produced using forced labour, India has managed to reduce the additional tariffs to 10% from 12.5%, which the US had proposed to impose on its exports. With this, India has gained tariff advantage over competitors China, Vietnam, Thailand and Türkiye, who will be charged 12.5%. 

India, which imposed the prohibition through a notification on July 13, is among 17 countries, including Bangladesh, Pakistan, Sri Lanka, Indonesia, Malaysia and the United Kingdom, with lower tariffs. Consequently, Indian exporters largely retain their relative competitiveness against Bangladesh, Cambodia, Pakistan, Sri Lanka, Indonesia and Malaysia in labour-intensive sectors such as textile, garments, leather and footwear.