MUMBAI: Despite the absence of a specific law prohibiting goods linked to forced labour across supply chains, Indian manufacturers ranging from textiles and apparel to auto components, processed foods and steel have put in place stringent frameworks, including multi-layered compliance mechanisms, traceability systems, documentation protocols and adherence to global ESG standards.
These measures, industry executives say, help manufacturers uphold ethical sourcing practices, mitigate forced labour risks and strengthen India’s position as a trusted partner in global supply chains.
While domestic regulations prohibit forced labour within the country, the issue has gained fresh relevance following the US Trade Representative’s (USTR) proposal to impose a 12.5% tariff under Section 301 on imports from India and several regional peers.
The proposed levy targets countries deemed to have inadequate safeguards against goods produced using forced labour anywhere in their supply chains.
For India’s solar energy industry, the proposed levy presents both challenges and opportunities. The USTR’s March 2026 investigations named India under both the excess-capacity and forced-labour tracks, with polysilicon traceability—particularly Xinjiang-linked inputs—emerging as a key vulnerability for manufacturers dependent on Chinese supply chains.
“These pressures make the case, more compellingly than ever, for accelerating domestic manufacturing across the full clean-energy value chain — from cells, wafers and modules to batteries and critical minerals,” says Chetan Shah, Chairman & Managing Director, Solex Energy Limited.
The US absorbed nearly 97% of India’s solar module exports between FY23 and FY25, with total photovoltaic export value rising 23-fold to around $2 billion by FY24.
Amod Anand, Co-founder and Director of Loom Solar, says the US Section 301 forced-labour probes are a wake-up call but also a generational opportunity for India to understand the cost of dependence on a single export market.
At the same time, he says the situation underscores the need for a fully traceable and ethically auditable supply chain from polysilicon to module. Anand believes India’s 125 GW manufacturing base, supported by the PLI scheme and the June 2026 ALMM cell mandate, is being re-engineered to meet some of the world’s most stringent compliance standards.
Industry bodies maintain that several export-oriented sectors already have robust safeguards in place. The Confederation of Indian Industry (CII) says industry associations and global buyers are increasingly working with suppliers to embed Responsible Business Conduct (RBC) practices across supply chains in anticipation of evolving due-diligence requirements in major export markets.
According to CII, the foundry industry, for instance, requires a skilled and specialised workforce for technical operations, making it inherently unsuitable for forced labour practices. Similarly, the steel sector operates within a robust legal and regulatory framework governing labour standards, backed by statutory protections, compliance mechanisms and judicial oversight.
“Industry increasingly relies on voluntary self-regulatory mechanisms—like Supplier Codes of Conduct, Responsible Business Conduct frameworks, Human Rights Due Diligence, supplier audits and traceability systems—to identify and mitigate forced-labour risks in both domestic and imported supply chains,” CII says.
The Federation of Indian Chambers of Commerce and Industry (Ficci), which has apprised the USTR of India’s export supply-chain practices, says sectors such as processed foods follow stringent supplier onboarding and audit processes that cover statutory and regulatory compliance as part of broader due-diligence efforts.
Businesses also undertake periodic supplier audits and make regulatory compliance a mandatory condition for vendor engagement.
Despite its heavy dependence on China for key raw materials, Indian pharmaceutical manufacturers expect limited impact from the USTR investigation, as the sector remains outside the scope of current US tariff measures and is likely to continue receiving preferential treatment amid ongoing India-US trade negotiations.
India imports more than 65% of its API and bulk drug requirements for several key therapeutic segments from China. However, the country’s position as the largest supplier of generic medicines to the US—accounting for nearly 40% of generics consumed there by volume—offers a strategic advantage.
“India is a major generics supplier to the US, so there are compelling reasons why the US may proceed cautiously when it comes to the pharma sector,” said Viranchi Shah, spokesperson at the Indian Drugs Manufacturers’ Association.
“To ensure market access, Indian companies must align with foreign regulations like those of the EU and US (Uyghur Act). Critical export-heavy sectors are actively implementing private supply chain audits and rigorous origin tracing,” says Ajay Sahai, director-general at exporters’ body FIEO.
The export-heavy textiles and apparel exporters have undergone rigorous audit and certification processes, including regular inspections by US authorities and third-party certification bodies over the past decade, strengthening supply-chain oversight and compliance standards.
“Major players increasingly partner with internationally recognised standards such as the Responsible Sourcing Network’s YESS Standard (Yarn Ethically and Sustainably Sourced) to support mills and promote ethical sourcing across the value chain,” according to Ficci.
Although official estimates are unavailable, Chandrima Chatterjee, Secretary-General of the Confederation of Indian Textile Industry, says a substantial share of India’s textile and apparel exports already move through supply chains backed by recognised fibre-traceability certifications such as GOTS, OCS, GRS, RCS and Better Cotton Traceability.
The share, she says, is rising rapidly in response to evolving regulatory requirements in markets such as the European Union and the UK.
India imports certain types of cotton like long-staple varieties but is a net exporter of cotton inputs. It has no dependence on China for cotton sourcing, a factor that industry executives believe could insulate exporters from the proposed US forced-labour levy.
“Experiences from previous US tariff increases show that some exports would absorb part of the cost through lower margins, some negotiate prices with buyers, and some pass the increase through the supply chains to retailers and consumers,” notes Ajay Srivastava, founder, GTRI. Many exporters see the additional compliance costs as necessary investments to maintain access to premium segments of the US and European markets, he adds.
Source: The Financial Express
