Preferential Duty of 10
percent in Indian Exports to US Compared to 12.5% Faced by Some Others, but
Textile not Covered in 10 percent, Negotiations on this Continue
1.
Final Section
301 Measures Announced
o On 23
July 2026, the United
States Trade Representative (USTR) announced the final measures
under Section 301 of the U.S.
Trade Act, 1974 following its investigation into the forced labour-related
import policies of 60 economies,
including India.
2.
Additional
Duty Reduced
o The USTR imposed an additional 10% ad valorem duty
on imports from India.
o This is lower than the 12.5% duty proposed in the
draft measures issued on 2
June 2026.
3.
India's
Diplomatic Engagement
o The Government of India actively engaged with
the USTR throughout the investigation by:
§ Submitting detailed written representations.
§ Participating in in-person consultations.
§ Appearing at public hearings.
o These efforts contributed to India being placed
in the lower tariff tier
under the final measures.
4.
Competitive
Advantage
o The lower 10% tariff gives Indian exports a
relative advantage
over exports from many other economies subject to higher
additional duties.
5.
Major Export
Categories Exempt
o Several important Indian exports remain outside the scope of the
additional 10% duty, including:
§ Generic pharmaceuticals.
§ Smartphones.
§ Certain other specified products already exempted.
6.
Section
232 Products Excluded
o Products already covered under Section 232 measures—such
as:
§ Steel,
§ Aluminium, and
§ Auto parts,
o are not
subject to the additional Section 301 duty.
7.
Extent
of Coverage
o Due to these exemptions:
§ Approximately 45% of India's exports to
the United States remain outside
the additional 10% duty.
§ The remaining 55% of exports will attract
the additional 10% Section
301 tariff.
8.
Lower Relative
Tariff Burden
o Even for products covered by the new duty,
India's overall tariff incidence is lower
than that applicable to most other economies included in the USTR
investigation.
9.
Textile
Mechanism Pending
o The textile-specific
mechanism referred to in the final USTR measures has not yet been established or operationalised.
o India continues discussions with the United
States on this issue.
10. Ongoing Bilateral Trade Negotiations
o The textile issue forms part of the broader
India–U.S. Bilateral Trade
Agreement (BTA) negotiations.
o India reaffirmed its commitment to concluding
the BTA at an early date, consistent with:
§ The announcement of 2 February 2026, and
§ The India–U.S.
Joint Statement of 7
February 2026.
The USTR's final Section
301 measures reduce the proposed additional duty on Indian imports from 12.5% to 10%, while exempting
nearly 45% of India's exports,
including pharmaceuticals, smartphones and products already covered under Section
232. India's sustained engagement with the U.S. helped secure a comparatively favourable
tariff position, even as both countries continue negotiations on the proposed Bilateral
Trade Agreement.
The United States Trade Representative (USTR)
announced on 23rd July 2026 the final measures under Section 301 of the U.S. Trade
Act, 1974. The measures follow USTR’s investigation into the acts, policies and
practices of 60 economies, including India, relating to the imposition and enforcement
of prohibitions on the importation of goods produced with forced labour.
USTR has imposed an additional 10% ad valorem
duty on imports from India. This is a reduction from the 12.5% duty initially proposed
on 2nd June 2026. The Government of India remained closely engaged with USTR throughout
the investigation through detailed written submissions and in-person consultations,
including participation in public hearings. As a result of these sustained efforts,
India has been placed in the lower tier of additional tariffs under the final measures,
providing a relative advantage to Indian exports in key sectors.
A substantial share of India’s exports to
the United States, which currently attract zero additional duties, such as generic
pharmaceuticals, smartphones and certain other specified products, continue to remain
outside the scope of the additional 10% duty. Further, products already covered
under Section 232 measures, including steel, aluminium and auto parts, are not subject
to the additional 10% duty. Section 232 duties are applicable broadly to all countries
with limited exceptions. On account of these exemptions, an estimated 45% of India’s
exports to the United States remain outside the purview of the additional 10% Section
301 duty. The remaining 55% of exports will attract the additional 10% duty, where
India’s tariff incidence is comparatively lower than that for most other economies
covered by the investigation.
The textile specific mechanism referenced
in the final measures is yet to be established and operationalised.
India continues to engage with the U.S. on this matter as part of the ongoing negotiations
for the India-U.S. Bilateral Trade Agreement.
The Government remains committed to working
with the United States towards the early conclusion of the India-U.S. Bilateral
Trade Agreement, as announced on 2nd February 2026 and in accordance with the Joint
Statement issued on 7th February 2026.