TL;DR: making carpets is a rough affair. The work itself is dusty and dangerous. Workers spend hellaciously long shifts hunched over looms at dimly-lit stations, surrounded by sharp tools, litter, and rusty machinery. Pay is low, and even when workers agree ex ante to a particular wage, they often find ex post that actual wages are on the closed interval between zero and the agreed-upon wage, more than just a token epsilon from the right bound. Overtime pay is not a thing that exists there.
Please direct your attention to pages 22-23 of the report. There, we have a discussion of relevant legislation. The author takes the reader on a tour of the statutes defining forced labor, bonded labor, child labor, and human trafficking. Let me quote the latter verbatim so you can see for yourself how many of the EE conditions are engaged (statute in italics, EE-relevant passage also in bold):
Human trafficking is defined in numerous international conventions and domestic laws. The first international definition for human trafficking was provided by the 2000 United Nations “Palermo Protocol.” India ratified the Protocol in May 2011. Article 3 of the Protocol defines human trafficking as:All there, black and white, clear as crystal. The investigation found just shy of 300 cases of human trafficking that fit this particular bill. And to their credit, they did heap much of the blame for these abhorrent working conditions on the institutions that support them, particularly the caste system, but mostly acknowledging that what's going on is coercion by circumstance (p. 29, Table 3). For the bonded-labor cases, parents valued cash advances more than they valued their kids not going off to make carpets. Rightly or wrongly, that shocks the sensibilities of well-to-do readers, particularly when 80% of the bond debenture was for "consumption." Why, just imagine sending your own child off to work with dangerous industrial equipment so you could pick up a PS4.
“Trafficking in persons” shall mean the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs.
Smithian sympathy is hard. Framing matters. Context matters.
Everything in this report is good shoe-leather investigation up until the Recommendations section (p. 53). There, the author settles back into predictable feel-good Western, affluent-style nostrums that do precisely zero to address the underlying problems that generate heritable poverty. #9 is particularly risible: "Support and empower vulnerable communities." That's a fine idea, one quite consistent with good institutional analysis, but it's expressly not something that can be fixed with a wave of a magic wand. I daresay that my neoliberal dudebros AG and NS would agree that the Lindy Effect is not that bad a way to describe the durability of India's caste system: a British occupation ended suttee, but did little to eradicate untold generations of dominion-by-birthright. Reformers with no skin in the game are going to do better? Pollyanna please.
Look, the way to root out corrupt business practices like this must provide better alternatives for all parties. Bonded labor is a problem, so why not push for immigration reform so that poor villages can send folks to earn wages in highly productive enterprises and send home remittance payments? Prosecutions and investigations (#8) do quite literally nothing for the workers other than force them to accept a definitionally poor BATNA.
A soft heart is an asset. Please let's not couple it with a soft head.