US Section 301 Tariffs: What a 10% Duty Means for Indian Food Exports
Landed-cost arithmetic under the forced-labour tariff action, and the case for Gulf and ASEAN diversification
Since 24 July 2026, goods of Indian origin entering the United States have carried an additional 10% ad valorem duty under Section 301 of the Trade Act of 1974 (HTS heading 9903.05.44). The duty comes out of the US Trade Representative's forced-labour investigations into 60 economies. Seventeen of them, including India, Bangladesh, Pakistan, Canada and the United Kingdom, pay 10% because they prohibit imports of goods made with forced labour; 38 economies without a comparable ban, among them China, Vietnam, Thailand and the Gulf states, pay 12.5%, and five others are capped. India was slated for 12.5% when the action was proposed in June and moved to the lower band after amending its Foreign Trade Policy on 14 July 2026.
How the 10% Lands on Food Exports
The Section 301 duty stacks on top of the normal MFN rate rather than replacing it, so an Indian container of basmati, pulses, spices or processed food costs the US importer roughly 10% more at the port than it did in June. Against Pakistan, India's main basmati competitor in North America, the duty is neutral because both sit in the 10% band. Against Thai and Vietnamese rice, Indian origin now carries a 2.5-point advantage. On commodity lines where the exporter's margin is in single digits, that spread is big enough to decide who gets the shelf.
Two details matter before assuming the duty applies to your line. Heading 9903.05.86 exempts a product list in U.S. note 52(b), which covers goods the United States cannot produce in sufficient quantity, and whether a particular rice, spice or pulse subheading is on it has to be checked code by code. Goods in transit before 24 July and entered before 28 July were also excluded. Ask the importer's customs broker for the Chapter 99 treatment of the exact 10-digit HTS code rather than pricing a flat 10%.
Why This Is Not a Reciprocal Tariff
The sweeping reciprocal tariffs imposed under emergency powers were struck down by the US Supreme Court in February 2026, and the temporary 10% all-country tariff that bridged the gap expired on 24 July. The Section 301 duties are their replacement, issued under ordinary trade law after two rounds of public hearings, which makes them harder to unwind than an emergency measure. India has contested the investigation and wants labour standards handled inside the bilateral trade agreement still under negotiation. Until that agreement lands, exporters should treat the 10% as a durable cost, not a temporary one.
The Case for Gulf and ASEAN Volume
A statutory duty sets a floor under landed cost that no freight negotiation removes. The practical response is to keep US business for lines where 10% is survivable and route commodity volume to markets with no comparable surcharge: the GCC, where India is already the leading rice supplier and a week's sailing from Nhava Sheva; East Africa; and ASEAN buyers, where the India-ASEAN trade in goods agreement lowers duties on many agricultural lines. These are the markets TGK Agro already serves, and they absorb the same containers without the Chapter 99 line on the entry.
Value Addition as a Buffer
For exporters that want to keep a North American footprint, the duty hurts least where the customs value is small relative to the retail price: retail-packed basmati, blended spice packs, organic-certified pulses and private-label programmes. Consumer packaging, organic and FDA-ready documentation and branded positioning are what stop a 10% duty from deciding the deal.