DGFT Prohibits Import of Goods Produced Using Forced Labour to Make Out Case before USTR 301 Action

DGFT has issued Notification No. 23/2026-27 dated 13 July 2026, amending the Foreign Trade Policy, 2023.

Key provisions:

· Import of goods produced or manufactured, wholly or partly through forced labour, has been prohibited.

· DGFT will conduct an inquiry to determine whether forced labour was used in producing the goods.

· Based on the inquiry findings or other relevant material, the Central Government may notify specific goods whose import will be prohibited.

· “Forced labour” has been defined in line with the ILO Forced Labour Convention, 1930 as work or service extracted under threat of penalty and not undertaken voluntarily.

· The detailed inquiry procedure will be prescribed separately in the Handbook of Procedures.

· The notification will take effect 30 days after its publication in the Official Gazette.

Following US 301 action on imports from India and other countries, DGFT follows suite, prohibits only imports using forced labour, exports excluded!

India seeks to become part of US camp with prohibition on import of forced labour goods to move up from 12.5 percent duty bracket to 10 percent category.

The United States Trade Representative (USTR) initiated Section 301 investigations into 60 economies over allegations of failing to ban or effectively enforce bans on importing goods made with forced labour. This group includes major trading partners like India, China, Japan, the UK, South Korea, and the European Union.

The USTR proposed varying additional import tariffs depending on each country's enforcement status:

· 12.5% Tariff: Proposed for 54 economies, including India, China, Japan, Russia, and Switzerland.

· 10% Tariff: Proposed for 6 economies with partial bans or trade agreements in place, including Canada, Mexico, and the European Union.

To address the probe and prevent U.S. tariffs, countries like India have amended their foreign trade policies to explicitly prohibit the import of goods produced wholly or in part through forced labour. This will bring them in line with advanced countries who are in the 10% category. It remains to be seen whether this is acceptable to USTR which alleges forced labour in export of textiles and leather from India.

[DGFT Notification No. 23/2026-27 dated 13 July, 2026]

Effect of the Notification: This notification inserts Paragraph 2.20B in the FTP, 2023, to empower the Central Government to prohibit, by notification, the import of goods produced or manufactured, wholly or in part, through the use of forced labour. It also inserts Paragraph 11.64 defining "Forced Labour" in accordance with the ILO Forced Labour Convention, 1930 (No. 29), thereby strengthening the FTP framework for restricting imports of goods produced through forced labour. The provisions of this notification shall come into effect after the expiry of 30 days from the date of its publication in the Official Gazette.

Subject: Prohibition on Import of Goods Produced Using Forced Labour - Insertion of Para 2.208 and Para 11.64 in the Foreign Trade Policy (FTP) 2023.

S.O. (E) In exercise of powers conferred by Section 3 read with Section 5 of the Foreign Trade (Development & Regulation) Act, 1992, read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy (FTP) 2023, as amended from time to time, the Central Government hereby inserts a new Para 2.208 in the Foreign Trade Policy, 2023 as follows with effect after the expiry of 30 days from the date of publication of this Notification in the Official Gazette.

Para 2.20B: Prohibition of import of goods produced or manufactured using forced labour:

The import of goods produced or manufactured, wholly or in part, through the use of forced labour is prohibited. The Central Government may, from time to time, specify, by notification, the goods whose import shall be prohibited under this paragraph, having regard to the findings of such enquiry or such other material as it may consider appropriate. The procedure for conducting an enquiry by the Director General of Foreign Trade into the use of forced labour in the production of such goods shall be as prescribed in the Handbook of Procedures, 2023.

2) A new para 11.64 is added under Chapter 11 (Definition) of the FTP, 2023

11.64 "Forced Labour" means all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily, as defined under the ILO Forced Labour Convention, 1930 (No. 29).

This is issued with the approval of the Minister of Commerce & Industry.

(Issued from File No. K-31013/1/2026-DIR NAFTA-Part(4)]