German Forced Labor Law Will Not Significantly Affect Trade With India, According to GTRI
According to a research by the think-tank GTRI, the German legislation to prohibit forced labor and defend human rights in global corporate supply chains would have minimal effect on India’s commerce with the European nation since India already has robust procedures to address these concerns.
German supply chains that stretch both within and beyond the country are not allowed to use forced labor or engage in other labor law breaches.
On January 1st of this year, the Supply Chain Due Diligence Act (SCDDA) went into force.
It is applicable to companies with more than 3,000 workers. These consist of both foreign and German companies conducting business.
This implies that it affects a sizable number of German businesses, and it will probably have a significant influence on how these businesses operate.
Smaller businesses will be subject to the rule starting in January 2024.
According to a paper released on Monday by the Global Trade Research Initiative (GTRI), “The SCDDA may have little impact as India already has comprehensive labor laws prohibiting child labor, forced labor, and workplace discrimination.”
It claimed that India had minimum wage laws as well.
The research said that “it is crucial to raise awareness of labor laws among workers and employers and establish effective complaint-handling mechanisms in order to ensure effective implementation.”
It was also stated that German legislation has moved responsibility for risk identification and response from the government to private sector companies.
Infractions of labor regulations, child labor, forced labor, and workplace health and safety are all covered by the legislation.
According to GTRI co-founder Ajay Srivastava, because of the wide spectrum of infractions, businesses must approach due diligence in their supply chains holistically.
He advised the business sector to take precautions and remedial action against such infractions inside their own operations and the activities of their foreign suppliers, including tracking down to the mining of raw materials.
“This means that companies will need to collect information about their suppliers, their operations, and the risks they face,” he added, adding that the SCDDA imposes legal liability on businesses that disobey the law.
He also raised concern about expectations that other nations may follow the SCDDA in the years to come.
All EU (European Union) members have some kind of laws against forced labor, and these laws are often amended and tightened.
The EU issued a new regulation proposal to outlaw goods made using forced labor in September 2022. In the event that the plan is passed, it will be illegal to sell any goods produced using forced labor anywhere in the EU.
The most extensive laws against forced labor have been passed by France and the Netherlands.
“Due to the substantial compliance requirements and additional due diligence procedures, the bill may result in higher expenses for businesses. The regulation, however, may also benefit employees since it might shield them against exploitation, according to the study.
Furthermore, it noted that the SCDDA is a complicated piece of law whose implementation may meet serious difficulties.
“For example, if the SCDDA is strictly enforced, Germany may face difficulties producing electric vehicles, as cobalt, a crucial component for batteries, is frequently mined in the Democratic Republic of the Congo, where human rights issues, such as child and forced labor, are prevalent,” it was stated.
Due to worries about how Uyghurs are treated, the European nation would have to stop importing industrial items from China, it added.
In 2021–2022, bilateral trade between Germany and India was USD 24.8 billion. With cumulative FDI inflows of USD 13.8 billion from April 2000 to September 2022, Germany ranks ninth among investors in India.
India’s major commercial partner in Europe and one of its most reliable international allies is Germany.
