US imposes 10% tariff on India under forced labour probe
UPSC / SSC current affairs note · Economy
Why in news
The US Trade Representative has announced a permanent 10% additional tariff on India and several other countries following a Section 301 probe into forced labour. The tariff, effective from Friday, replaces a temporary 10% import duty and is unlikely to have a major impact on India's exports.
Background
The US initiated a Section 301 investigation into countries allowing imports made with forced labour. India had questioned the probe as unilateral and unjustified, but later revised its Foreign Trade Policy to adopt ILO definitions and provide for investigations, which the USTR factored into the tariff decision.
Key facts
US imposed a permanent 10% additional tariff on India under Section 301 for forced labour.
The tariff replaces a temporary 10% import duty and is lower than the proposed 12.5% for India.
India is among 17 countries affected, including Bangladesh, Pakistan, Sri Lanka, UK, Cambodia, Canada, Indonesia, Malaysia, and Mexico.
India revised its Foreign Trade Policy to adopt ILO definition of forced labour and provide for probes, influencing USTR's decision.
A second US probe against over a dozen nations for structural overcapacity poses additional threat to Indian exports.
Indian basket of crude oil jumped 11% to $103.33 per barrel due to Strait of Hormuz closure and Red Sea disruptions.
Global Brent crude crossed $100 per barrel but eased to $97.08.
International FOB prices of petrol and diesel surged, raising possibility of under-recoveries for oil marketing companies.
India imports nearly 90% of its crude oil; retail prices linked to international product prices.
Oil marketing companies faced under-recovery over Rs 1,000 crore per day in May when crude averaged over $110 per barrel.
Prelims pointers
- Section 301 of US Trade Act of 1974
- International Labour Organization (ILO) definition of forced labour
- Directorate General of Foreign Trade (DGFT)
- Foreign Trade Policy (FTP)
- Strait of Hormuz
- Red Sea
- Brent crude oil
- Indian basket of crude oil
- Free-on-board (FOB) pricing
- Under-recovery
Mains angles
- GS2: Impact of US trade tariffs on India-US relations and global trade dynamics.
- GS3: Effect of tariffs on Indian exports and the need for diversification.
- GS3: Energy security concerns due to crude oil price volatility and geopolitical disruptions.
- GS2: Role of international organizations like ILO in shaping trade policies.
- GS3: Analysis of India's forced labour regulations and compliance with international standards.