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Fashion giant Gap has said it will not sell an embroidered dress product, allegedly manufactured by child labourers, in its stores.

An investigation by the Observer newspaper stated that children in New Delhi had been sold to subcontractors who were working on export contracts for the firm. These firms had allegedly not paid the children for over four months and were forcing them to work long hours in poor conditions.

The clothing manufacturer, which prides itself on its ethical production values, has said that it would launch an investigation into the incident.

A spokesman for Gap, Dan Henkle, called the use of children to produce goods as "completely unacceptable", adding that the firm had refused to work with companies who had not met their guidelines in the past.

Mr Henkle added that a meeting of suppliers in the region would be called soon to emphasise the company's ban on the use of illegal production techniques.

The spokesman said: "All of our suppliers and their sub-contractors are required to guarantee that they will not use child labour to produce garments."

"We are proud of this programme and we will continue to work with government, trade unions and other independent organisations to put an end to the use of child labour," he concluded.