India’s exports in sectors such as solar equipment, electronics and garments could face greater scrutiny after the United States initiated a new trade investigation into the presence of forced labour within international supply chains. The probe was announced on March 12 by the Office of the United States Trade Representative under Section 301 of the Trade Act of 1974.
According to a report by the Global Trade Research Initiative (GTRI), the investigation covers around 60 economies, including India, China, the European Union, the United Kingdom, Japan, Canada, Australia, Mexico, Brazil, Vietnam, Bangladesh, Cambodia and Pakistan.
This marks the second Section 301 investigation launched by Washington in March, signalling a broader push by the US to review international trade practices.
The inquiry will assess whether goods manufactured using forced labour are entering global supply chains and eventually reaching the US market. “It will look at two situations: where forced labour is used directly in production, and where countries import inputs made with forced labour from other countries and use them to produce goods that are later exported to the United States.”
In addition, authorities will examine whether advanced economies have sufficient legal frameworks and enforcement mechanisms to prevent such goods from entering trade networks.
Why China Is Central To The Investigation
The probe is expected to focus heavily on the Xinjiang Uyghur Autonomous Region in China due to long-standing allegations related to labour practices involving Uyghur and other Muslim minority groups. Governments and human-rights organisations have previously alleged that labour-transfer programmes move workers into agricultural and manufacturing facilities connected to export-oriented industries, states the report.
However, China has consistently rejected these accusations, saying the programmes are intended to promote employment and provide vocational training opportunities.
Past investigations have linked labour programmes in Xinjiang to industries including cotton farming, textile manufacturing, garment production, tomato processing and the production of polysilicon used in solar panels. These concerns led the US to implement the Uyghur Forced Labour Prevention Act, under which goods associated with Xinjiang are presumed to be produced using forced labour unless importers prove otherwise.
Several products have therefore been categorised as high-risk within global supply chains. These include cotton and cotton textiles; Xinjiang alone accounts for roughly 20 per cent of the world’s cotton output, as well as polysilicon used in solar panels. Other products that have faced scrutiny include tomato paste, processed foods, electronics components, fabrics, garments, cables, peppers and garlic.
The investigation may also examine labour practices in countries such as Myanmar and North Korea, where forced labour allegations involving state authorities or armed groups have persisted.
How Indian Export Sectors Could Be Affected
Although India has strict laws prohibiting forced labour, including the Bonded Labour System (Abolition) Act, 1976, its export sectors could still come under scrutiny because many industries depend on imported raw materials and components. The GTRI report noted that several Indian sectors may be exposed to tighter regulatory checks due to their reliance on Chinese supply chains.
Solar equipment exports from India to the United States frequently depend on imported polysilicon or solar cells linked to Chinese manufacturers that have previously faced scrutiny over alleged labour practices in Xinjiang.
Similarly, India’s electronics industry relies heavily on components, cables and sub-assemblies sourced from China. If any of these parts can be traced to regions linked to labour-transfer programmes, they could become part of the investigation.
The textile and garment sector could also face challenges, as many Indian manufacturers import yarns and fabrics from Chinese suppliers. If these materials originate from cotton grown in Xinjiang, exporters may be required to demonstrate greater traceability. “Because the United States is a major market for solar equipment, electronics and garments, Indian exporters may face higher compliance costs and stricter documentation requirements as US authorities demand detailed proof of the origin of inputs used across supply chains,” the report said.
Section 301 Investigations Gain Momentum
The forced labour inquiry comes soon after another Section 301 investigation announced by the USTR on March 11. That probe is examining whether industrial policies in 16 economies have created excess manufacturing capacity that could harm US industries.
India has been named in both investigations.
According to the GTRI report, the United States appears to be increasingly using trade investigations as a policy tool, particularly after legal rulings limited earlier tariff strategies.
The report also suggested the move could discourage countries from stepping away from trade agreements negotiated during the presidency of Donald Trump after those deals lost relevance following a February 20 ruling by the Supreme Court of the United States.
