Blitz Bureau
NEW DELHI: When the temporary American surcharge expired on July 24, it did not simply vanish — it was replaced. The United States has imposed a new set of tariffs on some sixty trading partners under Section 301, tied to concerns about goods made with forced labour, and structured in two tiers of 10% and 12.5%. India has been placed in the lower 10% band. The reason is instructive: India’s own amendment to its Foreign Trade Policy on June 14, prohibiting the import of goods produced with forced labour, moved it from the higher bracket to the lower one before the measure took effect.
The detail matters more than the headline rate. India is one of seventeen countries in the 10% tier, alongside Canada, the United Kingdom, Bangladesh and others, and the new duty is lower than the 12.5% that had been floated in June. Crucially, it excludes several of India’s most important export categories — generic pharmaceuticals, smartphones, steel, aluminium and auto components — sparing large slices of trade from the levy altogether. New Delhi has said it will continue to engage with Washington to conclude the first-phase bilateral trade agreement, which negotiators still describe as being at the last fraction of legal text.
Policy as a shield: A June 14 amendment banning forced-labour imports placed India in the lower 10% tier of the new US tariff — below the 12.5% floated earlier — with generic pharmaceuticals, smartphones, steel, aluminium and auto parts excluded.
The cheapest concession a country can make is one it wanted to make anyway. A ban on forced-labour goods is good policy on its own terms — and it happened to buy a better tariff too.
At a Glance
• New measure: US Section 301 forced-labour tariffs on ~60 partners, tiered 10% and 12.5%
• India: placed in the lower 10% tier — one of 17 countries
• Why: India’s June 14 ban on forced-labour imports moved it down a bracket
• Excluded: generic pharma, smartphones, steel, aluminium, auto parts
Read against the past year, this is continuity rather than shock. Washington had already walked its reciprocal rate on Indian goods down from 25% to 18%, and the exclusions now carved out cover categories where Indian exporters are most competitive. The wider backdrop is one of widening options: the India–UK Comprehensive Economic and Trade Agreement has been in force since July 15, opening 99% of Indian goods to duty-free or reduced entry into Britain, and a concluded understanding with the European Union extends the same logic. An exporter with several open doors negotiates a single tariff line very differently from one with only one.
The constructive way forward runs on two levers India already controls. The first is to keep aligning trade rules with standards the country supports on their own merits — labour, environment, transparency — so that compliance and competitiveness move together rather than in tension. The second is execution: help exporters master rules-of-origin paperwork, keep logistics and certification sharp, and be ready to move volume the moment the American text is initialled. A tariff schedule is decided by negotiators; the margin that survives it is decided by preparation.
