India urges US to reconsider proposed 12.5% tariff, calls for bilateral trade talks

India has urged the United States Trade Representative (USTR) to reconsider its proposed 12.5 per cent tariff on Indian imports, arguing that trade disputes should be resolved through bilateral negotiations rather than unilateral measures.

The request comes as New Delhi and Washington continue talks on a bilateral trade agreement aimed at deepening economic ties.

The proposed tariff stems from one of two USTR Section 301 investigations launched in March into allegations of forced labour and excess industrial capacity across 60 countries, including India.

On June 3, the USTR proposed a 12.5 per cent tariff on imports from 54 countries, including India and China, while suggesting a 10 per cent tariff for several others, including Canada, the European Union, Indonesia, Mexico and Pakistan. The proposal has not yet been finalised.

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India raised its objections during a public hearing, with officials questioning both the legal basis and the methodology adopted in the USTR investigation.

India questions legal basis of probe

According to a News18 report, Brij Mohan Mishra, Joint Secretary in the Department of Commerce, said India considers the elimination of forced labour a constitutional obligation and an international legal commitment.

According to the written transcript of the July 8 hearing, Mishra argued that the USTR had not met the legal standards required under Section 301(d) of the US Trade Act. He said the absence of a specific prohibition on forced labour imports could not, by itself, be treated as an unreasonable trade practice without supporting evidence under the law.

Mishra also questioned the methodology used in the investigation, saying it relied on broad assumptions rather than country- or sector-specific evidence.

"In conclusion, it is submitted that the USTR reconsider the imposition of tariff in light of the identified inconsistencies in the report," he said. He added that any trade concerns should be addressed through the ongoing India-US bilateral trade negotiations instead of unilateral measures.

India seeks exemption for rice exports

According to the report, India also challenged the USTR's findings related to rice imports. Shreyans Gupta, First Secretary at the Embassy of India in Washington, DC, made submissions on behalf of the Agricultural and Processed Food Products Export Development Authority (APEDA).

Gupta rejected allegations that rice produced using forced labour was entering India and affecting the competitiveness of US rice exports. He said India has regulatory mechanisms in place that prevent the export of imported rice produced through forced labour.

He urged the USTR to withdraw the investigation against India or, if the proceedings continue, exempt Indian rice from the proposed additional duty.

Industry body backs government's stand

According to a PTI report, the Federation of Indian Chambers of Commerce and Industry (FICCI) also urged the USTR to reconsider the proposed tariff.

The industry body said the additional duty would increase costs not only for Indian exporters but also for US manufacturers, importers, retailers and consumers.

It argued that India's legal safeguards and industry compliance mechanisms already address concerns related to forced labour and warned that the tariff could disrupt resilient India-US supply chains.

The latest developments come as India and the US continue negotiations on a bilateral trade agreement that has been under discussion for more than 18 months.

The proposed pact aims to expand market access, lower tariff barriers and strengthen economic cooperation between the two countries.