Forced Labour and Modern Slavery Checks for Importers

On 29 July 2022 US Customs told every port to hold garments from Natchi Apparel, a factory in Dindigul, Tamil Nadu, on suspicion of forced labour. Five and a half weeks later it lifted the order and released the goods it had already detained. The company and its parent, Eastman Exports, had shown evidence that Natchi "had addressed all five" of the forced-labour indicators the order named (CBP, 7 September 2022 (opens in a new tab)). Part of that evidence was a binding agreement between the company, a brand customer, unions and workers' rights groups on harassment and violence, known ever since as the Dindigul Agreement (Business & Human Rights Resource Centre, 2022 (opens in a new tab)).

We'll keep coming back to Natchi, because it shows the two things this guide is really about. Forced-labour rules can stop goods at a border with no warning to the importer, and the way out is evidence about real working conditions rather than a certificate sitting in a folder.

Below we set out what each law asks of a small importer, where the known risks sit in Indian supply chains and the checks we think are fair. One honest caveat first - nothing here is legal advice, and if a buyer of yours or a regulator asks for a formal statement then get a lawyer to read it before it goes out.

Last researched 12 October 2026 · Next review 12 January 2027 · Written by SourcingFrom

1. What Each Law Asks of You, Honestly Sized

Most small importers either panic about these laws or ignore them completely. Neither is right, so here's the plain version, market by market.

United States. The US has two tools, and both work at the border. Under section 307 of the Tariff Act, CBP can issue a withhold release order against a producer and detain its goods at every port, which is exactly what happened to Natchi (US Department of Labor (opens in a new tab)). Your size doesn't come into it. If your goods are caught then you either export them back or prove they weren't made with forced labour. The second tool, the Uyghur forced-labour law, presumes guilt for goods with Xinjiang inputs, and for Indian goods that risk lives in the cotton and yarn (we cover it on cotton traceability). There's a trade angle too. India adopted its own ban on forced-labour imports in 2026, which is why the US Section 301 forced-labour tariff sits lower for India than for some others, and the rate is on India to the US.

European Union. From 14 December 2027 no product made with forced labour may be sold in, or exported from, the EU (European Commission (opens in a new tab)). It applies to every business, whatever its size. There's no reporting form to fill in, and instead national authorities investigate risks and can order products off the market. The Commission's guidelines came out in the Official Journal on 3 September 2026, but a law firm reported in September that the promised risk database still wasn't live, and only ten member states had named their authority by then (Osborne Clarke, September 2026 (opens in a new tab)). The machinery is late, sure. A range you order in late 2027 still sells under it.

United Kingdom. There's no import ban here. Businesses supplying goods or services in the UK with a turnover of £36 million or more publish a modern slavery statement every year (GOV.UK (opens in a new tab)).

Australia. This is also a reporting law, at AUD 100 million consolidated revenue under the Modern Slavery Act 2018 (that's the figure law firms report, because the government page (opens in a new tab) timed out on our read).

New Zealand and the UAE. We found no forced-labour import rule or reporting law in force in either.

So if you turn over a few hundred thousand pounds, are you off the hook in the UK and Australia? Legally yes, commercially no. The moment you sell to a retailer that reports, its questionnaire lands on your desk, and its statement is only as good as the answers you give it.

In practice the reporting laws reach small importers through their customers.

2. Where the Known Risks Sit in Indian Supply Chains

India's labour risks aren't spread evenly, and treating every Indian factory as a suspect is both unfair and useless. The documented risks cluster in a handful of places, and most of them sit upstream of the factory you actually meet.

Spinning mills in Tamil Nadu. The best-documented case is the Sumangali scheme, where young women were recruited into spinning mills and hostels on the promise of a lump sum after three years, made up largely of withheld wages (SOMO and ICN, Captured by Cotton, 2011 (opens in a new tab)). That report is old, and the industry and brands have worked on the problem since. The shape of the risk hasn't moved, though. It sits at the mill, two steps behind the garment unit, where the garment unit's audit can't see it. Indian garment production also runs on job work, with orders split across workshops (FS-SUP-020, buyers on forums), which is normal business but does mean the factory that signs your PO may not be where your goods were stitched.

Sandstone and granite quarries in Rajasthan and the south. Child and bonded labour in Indian sandstone has been reported since at least 2009, and the American Bar Association's 2020 report traced it into the US supply chain. We cover that history, and how UK importers changed the way they buy, on natural stone from India.

Home-based and hand work. Embroidery, beading and some carpet work is done at home or in small units on piece rates. Home work is not forced labour, and most of it is ordinary family income. It is, however, where child labour and debt to a middleman can hide, and a factory audit can't see it by design.

What do these three have in common? None of them is the place a buyer usually visits. That's the real lesson in the data, and it's why a factory audit on its own answers a much narrower question than people assume.

3. What a SMETA Audit Proves and What It Doesn't

SMETA is the audit you'll hear about most from Indian exporters, because UK and EU retailers ask for it. So it pays to know exactly what you're getting.

It proves that an auditor visited one site on given days, followed a published method and wrote down what it found, with a corrective action plan for the problems. That's genuinely useful. A recent report with a closed action plan tells you a factory takes this seriously enough to pay for scrutiny.

What it doesn't do is certify anything. SMETA has no certificate and no product label (TÜV SÜD (opens in a new tab)). Sedex itself says it no longer accepts a SMETA report as a reliable picture of current conditions once it's 24 months old, and it's moving its platform's default from announced audits to semi-announced ones, with a reason required if you pick announced (Sedex (opens in a new tab)). An announced audit shows you a factory on its best day. And any audit covers only the site on the report, not the mill, the dye house, the job worker or the home worker behind it.

Buyers on forums come at this from another angle. Inspection integrity in India is a recurring worry, and some buyers rotate agencies or send unannounced visits because of it (FS-SUP-060, buyers on forums). We'd say the same of social audits - read the report, not the cover page, and check the date and the audit type before you accept it.

4. Fair Checks That Actually Find Things

Here's the set we'd use with an Indian supplier. It's built around the ILO's eleven forced-labour indicators, which include withholding of wages, retention of identity documents, debt bondage, restriction of movement and excessive overtime (ILO (opens in a new tab)). None of these questions accuses anyone, and a good exporter already asks the same things of its own subcontractors.

1. Map the chain one step back. For textiles that's the spinning mill and the dye house, for stone it's the quarry or block yard, and for hand work it's who does it and where. Ask which units are in-house and which are job work. Job work is normal, so say so when you ask.
2. Ask how workers are paid. Is it monthly into a bank account, with payslips? Is any amount held back until the end of a contract? A withheld lump sum is the exact shape of the Sumangali problem, and in our view it's the single most useful question to ask a mill.
3. Ask about hostels and documents. If workers live on site, can they leave freely in their own time? Does anyone hold their ID cards? Hostels aren't a red flag in themselves, since many are decent and they're how migrant workers get housing. Locked gates and held papers are.
4. Ask about recruitment. Are workers brought in by agents, and does anyone pay a fee to get the job? Fees charged to workers are how debt starts.
5. Look at hours against output. If a 40-person unit ships your order in half the time you'd expect then either there's more capacity than you were told or there's overtime nobody mentioned.
6. Get the latest audit report and read the findings. Skip the summary page. Ask what was found and how each finding was closed.
7. Visit, or have someone visit, unannounced at least once. Your own person on the ground is the strongest check buyers describe (FS-SUP-018, forum consensus). If you can't go yourself, SourcingSync (opens in a new tab) can map the chain and visit units in India for you.

Write the answers down and keep them with each order. Under the EU rules, and in a US detention, the question will be what you knew and when, so the file matters every bit as much as the visit.

5. When You Find Something

Finding a problem doesn't have to end a supplier relationship, and walking away on day one often leaves the workers worse off. Natchi is proof that remediation can be real, and fast enough to matter.

So work with the supplier on a plan, with dates, and check that it actually happened. Walk away when the supplier won't engage, hides units from you, or the problem is one remediation can't fix, such as a quarry run on bonded labour.

What if the problem is two steps up the chain, at a mill your supplier buys from through a yarn dealer? Then you face the same choice as on cotton origin. You can nominate the mill yourself and pay what that costs, or keep that product away from the markets where the risk is highest.

FAQ

6. Back to Dindigul

Natchi's goods came out of detention because somebody could show, in writing and quickly, what had changed on the factory floor. That's the standard worth building towards with your own suppliers, and it doesn't need a certificate or a promise in an email, just a short, dated file on who makes your goods, how they're paid and who checked.

It's work, and it's fair work. It's also a lot less work than five weeks with your stock in a bonded warehouse. Hope this helps.

Related reading: job work and subcontracting in India, textile certifications and Indian suppliers on a denied or entity list.