By Patricia Zengerle

WASHINGTON (Reuters) - U.S. lawmakers said on Tuesday they were concerned that Malaysia and India were rated too favorably in this year's State Department human trafficking report although the report seemed less influenced by politics than last year's.

The U.S. Department of State's closely watched annual Trafficking in Persons (TIP) report was released on June 30.

After last year's report provoked a firestorm of controversy, the Senate Foreign Relations and House Foreign Affairs Committees held hearings on Tuesday to review this year's findings.

A low ranking is a black mark on a country's reputation and can subject a government to sanctions limiting access to aid from the United States, the International Monetary Fund or the World Bank.

Last year, members of Congress and human rights groups said some countries' ratings were changed for political reasons.

For example, over the objections of State Department experts, Malaysia was upgraded in 2015, despite authorities' discovering mass graves of trafficking victims and rights groups' reporting continued forced labor in its palm oil, construction and electronics industries.

On Tuesday, lawmakers again questioned why Malaysia had not been downgraded. "It's hard to understand that they've made progress in 2016," Senator Ben Cardin, the top Democrat on the Senate Foreign Relations Committee, said.

Susan Coppedge, who runs the State Department's trafficking office, told lawmakers that Malaysia and India had both made improvements.

Some lawmakers and rights groups said Malaysia's 2016 ranking seemed to reflect President Barack Obama's advocacy for the 12-nation Trans-Pacific Partnership (TPP) trade pact, which would include Malaysia.

Labor unions oppose the TPP, which they fear could lead to U.S. job losses, while doing nothing to improve the treatment of workers in member countries.

In connection with Tuesday's hearings, the Communications Workers of America union questioned whether the TPP continued to influence the ratings of Malaysia and Thailand.

Senator Bob Corker, the Senate panel's Republican chairman, asked why India was rated Tier 2, saying that there are an estimated 12 million slaves in the country.

"The report highlights some progress, but official complicity in trafficking is widespread, victim protection is inadequate and inconsistent," he said.

The TIP report organizes countries into tiers: Tier 1 for nations meeting minimum U.S. standards; Tier 2 for those making significant efforts to meet those standards; Tier 2 "Watch List" for those deserving special scrutiny, and Tier 3 for countries failing to comply with minimum standards and not making significant efforts.

(Reporting by Patricia Zengerle; Editing by Cynthia Osterman)