updated 10/30/2007 9:46:56 PM ET 2007-10-31T01:46:56

India’s trade minister insisted Tuesday that activists were hyping accusations of child labor in the country, taking a defensive stand following a report that Gap Inc. had sold clothes made by children in a New Delhi sweatshop.

Commerce Minister Kamal Nath warned the result of the bad publicity could be rich countries limiting exports from poor nations such as India, which has a well-documented problem with child labor.

Nath did not comment specifically on the report about Gap, but spoke in broader terms.

“We are seeing increasing efforts, driven by (nongovernmental organizations), to come up with reports that show India in bad light,” Nath told reporters on sidelines of a meeting of global business leaders in New Delhi. “These are motivated. They are a serious cause of concern.”

Nath said there is “an increasing tendency among developed countries to erect non-tariff barriers,” some of which are based on such campaigns.

“There will be pressure on India to take retaliatory measures,” he warned without elaborating.

India’s transformation in the past decade into an emerging global economic power has done little to alleviate the country’s widespread poverty or the problems that go along with it, such as child labor.

The government estimates that 13 million children work in India, many of them in hazardous industries such as glass making, where such labor has long been banned. Rights activists place the number as high as 60 million; one estimate has 20 percent of India’s economy dependent on kids under the age of 14.

The scope of the problem was clear Monday when police and rights activists raided a New Delhi sweatshop where children were embroidering the flowing saris worn by Indian women.

The sweatshop was found just a few houses down from the now-shuttered operation that made the Gap clothes. Gap, following a Sunday report about the child labor in Britain’s Observer newspaper, has decided not to sell any of the products sourced from that factory, which it said was being run by a subcontractor.

India has consistently opposed linking labor standards to trade, saying that would amount to discriminating against developing countries, where poverty often drives children to work.

The use of child labor in India raises questions in particular for India’s garment exporting industry, a $10 billion a year business that grew by more than 20 percent in 2006.

Some of the biggest names in retailing make clothes in India, from Ralph Lauren to J.C. Penney. They all say that oversight of contractors is strict, but children’s rights activists disagree.

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