India Bans Forced Labour Imports

Context

In the updated policy, the government of India has made a policy to prohibit import of goods produced through forced labour, which is known as Foreign Trade Policy (FTP) 2023. It is under the aegis of the Directorate General of Foreign Trade (DGFT), a policy move which has coincided with international labour conventions and the world’s focus and investigations regarding ethical trading practices. 

Background and Context

• Gazette Notification: Ministry of Commerce and Industry made a notification in the gazette regarding the Foreign Trade Policy, 2023 in which Paragraph 2.20B was added. The ban will go into effect 30 days after it is officially published. 
• Global Scrutiny: The amendment was much affected by the United States Trade Representative (USTR) running Section 301 investigations on more than 50 economies. The US had earlier pointed out that India and others have not been doing a good job in enforcing its ban on goods produced by forced labour and recommended that it impose 12.5% tariffs on India. 
• Strategic Intent: This ban is an official move by India to ease trade hurdles in the continuing process of bilateral trade talks while facilitating the benefits of comparative advantage for domestic manufacturers. 

Key Features of the Ban

• Forced Labour Definition: The definition matches the definition of Forced Labour Convention of International Labour Organization (ILO), 1930 (No.29). Forced labour is defined as work or service performed under coercion or coercive conditions—a threat or penalty to which the worker does not submit freely; or when the worker is unable to refuse it. 
• Mechanism of Enforcement: The ban of all products from some countries is not an absolute ban, but is rather a mechanism that will be enforced in the future. Instead, it gives powers to the central government for restriction identified goods through wide-ranging enquiry/investigation process by DGFT. 
• Supply Chain Traceability: The notification necessitates rigorous traceability standards. They will probably need to implement strong measures to ensure that goods (especially in soft-segments) are free from forced labour in their supply chains to avoid punitive measures against exporters and importers. 

Implications for India

• Trade and Tariff Relief: The proactive amendment will certainly be the bargaining chip that India can use to counter such claims from the US and prevent it from having to impose additional Section 301 imposed tariffs. 
• Vulnerable sectors: active due diligence will be required in industries that have key inputs that are linked to forced labour, for example, in the textiles sector, solar panels, and electronics. 
• International Standing: India will gain from being seen as a viable ethical manufactory and improve India’s international standing in the ongoing negotiations for free trade agreements with the western countries, through its labour compliance with internationally recognized labour standards.

Source: The Hindu

UPSC Mains Practice Question 

(Q) The growing global emphasis on ethical and sustainable supply chains has brought the issue of forced labour into focus. Discuss the significance of India’s decision to ban imports linked to forced labour. What challenges may arise in its implementation?

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