India has secured partial relief after the United States limited the additional duty under its Section 301 investigation to 10%, while exempting nearly 45% of India’s exports to the U.S. from the new tariff, preserving the competitiveness of several key export sectors.
The Office of the U.S. Trade Representative (USTR) announced the final outcome of its Section 301 investigation on Thursday, imposing an additional 10% ad valorem tariff on selected imports from India. The final rate is lower than the 12.5% duty proposed earlier, following sustained engagement by the Government of India through written submissions, consultations and public hearings.
According to the Ministry of Commerce and Industry, around 45% of India’s exports to the U.S. will remain outside the scope of the additional tariff, while the remaining 55% will attract the new 10% duty. Despite the additional levy, India continues to face a lower overall tariff incidence than many other countries covered by the investigation, providing a relative competitive advantage in several export categories.
India exported goods worth $87.3 billion to the United States during FY 2025-26.
The ministry clarified that products already exempt from the additional duties—including generic pharmaceuticals, smartphones and certain specified products—will continue to enjoy duty-free treatment under the Section 301 action. Products already covered under separate Section 232 measures, including steel, aluminium and auto parts, are also excluded from the latest tariff announcement.
The government further noted that the textile-specific mechanism referred to in the U.S. notification has not yet been finalized and discussions are continuing as part of the ongoing negotiations for the proposed India-U.S. Bilateral Trade Agreement.
Throughout the Section 301 investigation, India strongly contested the U.S. findings relating to forced labour. The Ministry of Commerce argued that India has a comprehensive legal and institutional framework to prohibit forced labour and that the USTR had failed to demonstrate that India’s policies burden or restrict U.S. commerce, a key requirement for action under Section 301.
Leading industry bodies, including the Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FICCI), Agricultural and Processed Food Products Export Development Authority (APEDA) and the Automotive Component Manufacturers Association (ACMA), submitted detailed representations highlighting India’s robust labour compliance systems, constitutional safeguards, modern labour codes, product traceability mechanisms and internationally accepted sourcing standards.
Industry stakeholders also cautioned that higher tariffs would increase costs for U.S. manufacturers and consumers by disrupting well-established supply chains that have developed between the two countries.
Meanwhile, the Gem and Jewellery Export Promotion Council (GJEPC) rejected any suggestion linking India’s gem and jewellery sector to forced labour. While acknowledging that Indian exporters retain a 2.5 percentage-point tariff advantage over competitors in China and Hong Kong, the council cautioned that the additional 10% duty could still affect exports, particularly as natural diamond shipments from several European and African trading hubs continue to enjoy duty-free access to the U.S. market.
The Commerce Ministry reiterated that it will continue engaging with the U.S. administration to resolve outstanding trade issues through bilateral dialogue while advancing negotiations for a comprehensive India-U.S. trade agreement.
