Children as young as ten have been found working in a textile factory in India under conditions that have been described as close to slavery, producing clothes headed to Gap Kids. UK newspaper The Observer spoke with some of the kids working in the factory, who described long hours of unwaged work, threats, and beatings.

Gap claimed to be unaware that the clothing, which was intended for the Christmas market, has been improperly subcontracted to a sweatshop utilizing child labor. Gap thus announced that they had withdrawn the clothing involved while they investigate breaches of the ethical code that they imposed three years ago.

The factory in question was discovered in the Shahpur Jat area of Dehli, where Observer reporters found the children in filthy conditions, working on a pile of beaded children's blouses with serial numbers that Gap admitted matched their inventory. The tops, which were hand-stitched, were to be sold for about $40 in stores. They were destined for store shelves in the U.S. and Europe within the next 7 days, just in time to be sold to Christmas shoppers.

Gap has been criticized over the years for its practice of outsourcing huge contracts to the developing world. In 2004, they ended contracts with 136 suppliers who had been found producing garments in deplorable conditions. Gap had launched their own social audit, and found that forced labor, wages below minimum wage, physical punishment, coercion, and child labor were amongst the abuses found at some of their suppliers. Since then, Gap has ended contracts with 23 additional suppliers who have been found guilty of workplace abuses.

The latest discovery that Gap clothing continues to be produced in sweatshops and questionable conditions has renewed concerns about large retail chains outsourcing their clothing production to India. Recognized by the United Nations as the world's capital for child labor, it is estimated that more than 20% of India's economy is dependent on children. That's the equivalent of 55 million children under age 14.

In a statement from their San Francisco headquarters, Gap said:

"We firmly believe that under no circumstances is it acceptable for children to produce or work on garments. These allegations are deeply upsetting and we take this situation very seriously. All of our suppliers and their subcontractors are required to guarantee that they will not use child labour to produce garments. In this situation, it's clear one of our vendors violated this agreement and a full investigation is under way."