Executive Summary
The Directorate General of Foreign Trade (DGFT), through Notification No. 23/2026-27 dated 13 July 2026, has amended the Foreign Trade Policy (FTP), 2023 by inserting:
- Paragraph 2.20B – Prohibition on import of goods produced or manufactured using forced labour.
- Paragraph 11.64 – Definition of "Forced Labour" based on the ILO Forced Labour Convention, 1930 (No. 29).
The notification becomes effective after the expiry of 30 days from its publication in the Official Gazette, allowing importers a transition period to review their supply chains.
Background
Globally, several jurisdictions—including the United States, European Union and Canada—have strengthened restrictions on products linked to forced labour. India has now incorporated a similar framework into its Foreign Trade Policy.
Rather than imposing an immediate blanket prohibition on all imports, the notification empowers the Central Government to prohibit specific goods after appropriate enquiry and notification.
Key Amendments
1. Insertion of Para 2.20B
The new paragraph provides that:
- Imports of goods produced or manufactured, wholly or partly, using forced labour are prohibited.
- The Central Government may notify specific goods whose imports are prohibited.
- DGFT may conduct enquiries into allegations of forced labour.
- The detailed enquiry mechanism will be prescribed separately in the Handbook of Procedures (HBP).
This creates a statutory mechanism rather than a case-by-case administrative restriction.
2. Definition of Forced Labour
A new Paragraph 11.64 defines forced labour by adopting the internationally accepted definition contained in ILO Convention No. 29:
Work or service extracted from any person under the menace of penalty and for which the person has not voluntarily offered himself.
Using the ILO definition avoids ambiguity and aligns India's trade policy with internationally recognised labour standards.
Practical Implications
For Importers
This notification significantly elevates supply-chain compliance.
Importers should begin:
- mapping overseas suppliers;
- obtaining declarations regarding labour practices;
- incorporating contractual clauses prohibiting forced labour;
- maintaining documentary evidence of supplier compliance;
- conducting enhanced due diligence for high-risk jurisdictions and industries.
Although the notification does not require immediate certifications, businesses should prepare for future enquiries by DGFT.
For Exporters
Indian exporters may indirectly benefit.
Many international buyers increasingly require suppliers to demonstrate ethical sourcing. India's adoption of similar standards may strengthen the credibility of Indian exports in global markets.
For Multinational Companies
Companies with international procurement operations should integrate this requirement into their:
- ESG programmes;
- supplier onboarding;
- procurement policies;
- vendor audits;
- sustainability reporting.
Compliance Perspective
From a compliance standpoint, this notification shifts responsibility beyond customs documentation.
Organisations should consider:
- reviewing procurement policies;
- updating vendor due diligence questionnaires;
- introducing supplier representations and warranties regarding labour standards;
- strengthening internal compliance monitoring;
- maintaining audit trails demonstrating reasonable due diligence.
Although the notification presently empowers the Government to prohibit specified imports, companies should not wait until goods are notified.
Legal Significance
The amendment is noteworthy because it:
- aligns India's Foreign Trade Policy with international labour conventions;
- provides statutory authority for import restrictions;
- introduces an objective legal definition of forced labour;
- enables DGFT to investigate allegations before imposing restrictions;
- lays the foundation for future enforcement through the Handbook of Procedures.
Unlike some foreign regimes that presume certain goods are produced through forced labour, India's framework contemplates an enquiry before prohibiting imports.
Business Impact
Industries likely to face increased scrutiny include:
- textiles and garments;
- footwear;
- agriculture and food processing;
- seafood;
- mining and minerals;
- electronics and solar equipment;
- leather products.
Importers sourcing from regions with documented labour concerns may experience enhanced compliance obligations.
Key Takeaways
- DGFT has inserted Para 2.20B into the FTP, 2023, prohibiting imports of goods produced wholly or partly using forced labour.
- A new Para 11.64 adopts the internationally recognised ILO definition of forced labour.
- The Central Government may prohibit imports of specified goods through future notifications after conducting enquiries.
- The notification becomes effective 30 days after publication in the Official Gazette.
- Importers should use this transition period to strengthen supplier due diligence, contractual safeguards, and ESG compliance frameworks.
Overall Assessment
This notification represents a significant evolution in India's trade policy. While its immediate operational impact is limited by the need for subsequent notifications identifying prohibited goods and prescribing enquiry procedures, it establishes a clear legal basis for ethical trade enforcement. For compliance professionals, company secretaries, and international trade advisors, the focus should now shift from reactive customs compliance to proactive supply-chain governance and responsible sourcing practices.
No comments:
Post a Comment