What is Section 301? Why EAM Jaishankar says US trade probe could impact the deal

India-US trade deal talks have moved close to an agreement, but an ongoing US trade investigation under Section 301 could still influence when the two countries formally conclude the pact, External Affairs Minister S Jaishankar has said.

Speaking at a special interaction hosted by the Asia Society, EAM Jaishankar said negotiations had reached a broad understanding, but the continuing Section 301 process remained an important factor in deciding when to finalise the agreement.

"The 301 process is still in the works, it's still unfolding. So the issue for us is at what point do you close out an agreement which is very, very far advanced," he noted.

What is Section 301?

Section 301 of the US Trade Act of 1974 allows Washington DC to investigate foreign trade practices it considers unfair or burdensome to US commerce.

The Office of the US Trade Representative, or USTR, conducts these investigations and can recommend or impose measures including additional tariffs and other trade restrictions.

The provision gives Donald trump administered- US a mechanism to respond to foreign trade practices outside the normal tariff negotiations conducted through bilateral agreements.

For India, the current Section 301 process has become relevant because it could affect the tariff environment facing Indian exporters in US market.

Why is Section 301 important for India?

In June 2026, the USTR examined 60 economies over forced-labour-related import restrictions and enforcement practices, including India.

The initial proposal for India was an additional 12.5 per cent tariff. Following engagement between New Delhi and Washington DC, the final additional tariff was reduced to 10 per cent in July 2026.

The lower rate was viewed by India's Commerce Ministry as the result of sustained engagement with the US and changes to India's policy aimed at preventing imports linked to forced labour.

However, the broader Section 301 process is still unfolding. That uncertainty is now relevant to the timing of the India-US trade agreement.

India-US trade deal is ‘very, very far advanced’

Jaishankar also explained why negotiations have taken longer than initially expected, pointing to differences between the structures of the Indian and US economies.

“India is a society of small producers, small agriculture producers, small factories. So the, you know, apart from the per capita gap between India and the United States, the nature of production, nature of society is very different. So a trade negotiation required a certain amount of, I think, of patience and detailing to see it through,” he said.

Jaishankar said expectations of a rapid agreement had been tested by the complexity of the negotiations.

“...expectation that it could rapidly move forward, I think, was tested against a ground reality which was much more complex. So, today, I think we have reached a situation where there is more or less an understanding on the trade agreement.”

Why tariff competitiveness matters for India

The final tariff structure is important for Indian exporters competing with suppliers from ASEAN, China and Bangladesh in the US market.

Commerce and Industry Minister Piyush Goyal had earlier described the bilateral trade pact as “done and dusted”, while saying it could move forward once India secures appropriate competitive advantages in the US market relative to regional competitors.

For businesses, the eventual agreement could influence export costs, market access and investment decisions. The Section 301 process adds another variable because any additional US trade measures could alter the competitive environment even as the bilateral pact approaches completion.