Overview
- The Directorate General of Foreign Trade inserted a new paragraph into the Foreign Trade Policy on July 13 that prohibits the import of goods produced wholly or partly with forced labour and adopts the ILO Forced Labour Convention definition.
- The notification will take effect 30 days after its gazette publication and does not list banned products immediately, establishing a legal tool rather than instant trade restrictions.
- The DGFT is empowered to open inquiries on its own initiative or on information and will follow procedures to be set out in the Handbook of Procedures, 2023 before recommending any product-specific import prohibitions.
- The move responds to U.S. Section 301 scrutiny and a proposed U.S. tariff of roughly 12.5% on many countries, with New Delhi having filed objections and continuing bilateral trade talks with the USTR.
- Practical impact will depend on evidence standards, traceability across multi-country supply chains and enforcement capacity, and the rule could shift sourcing, raise compliance costs for importers and become a bargaining instrument in future trade deals.