US Forced Labour Probe Could Impact India’s China-Linked Supply Chains: GTRI

New Delhi, Mar 16 (KNN) The Global Trade Research Initiative (GTRI) has said that the new trade investigation launched by the Office of the United States Trade Representative (USTR) into alleged forced labour practices across 60 economies, including India and China, could lead to closer scrutiny of global supply chains, particularly those linked to China.

According to GTRI founder Ajay Srivastava, "The focus is likely to be on products that use imported inputs from China, suspected of being made with forced labour. If such inputs are used in goods exported from India to the US, those shipments could come under investigation," PTI reported.

He said goods exported from third countries, including India, could come under investigation if they contain such inputs. 

Section 301 Probe on Global Supply Chains

On March 12, the USTR initiated a Section 301 investigation to examine whether countries have failed to impose or effectively enforce bans on goods produced using forced labour. 

The probe will assess whether such policies are unreasonable or discriminatory and whether they burden or restrict US commerce.

The investigation will look at two situations: the direct use of forced labour in production and cases where countries import inputs produced with forced labour and use them to manufacture goods later exported to the United States.

The US argues that products made with forced labour can distort global markets by lowering production costs and undercutting legitimate producers.

Potential Impact on Indian Exports

GTRI said India’s exports of solar panels, electronics and garments to the US could face greater scrutiny because several sectors rely on imported components from Chinese supply chains.

"For instance, India's solar panel exports to the US often rely on imported polysilicon or solar cells sourced from Chinese supply chains, some of which have faced scrutiny over alleged forced labour in Xinjiang," Srivastava noted.

Similarly, India’s electronics manufacturing sector, which depends heavily on components, cables and sub-assemblies from China, could face investigation if these are sourced from regions linked to labour-transfer programmes.

In the textile and garment sector, Indian manufacturers frequently use Chinese yarns and fabrics, which may face tighter traceability rules if linked to cotton produced in Xinjiang, a region that accounts for about 20 per cent of global cotton production and is also a major source of polysilicon used in solar panels.

Possible Trade Action

The Section 301 process typically involves public consultations, evidence gathering and hearings before the USTR decides whether action is required. 

If the investigation finds that a country’s policies restrict US commerce, Washington may impose tariffs or other trade restrictions.

(KNN Bureau)