Ahmedabad: US President Donald Trump’s 26% adjusted reciprocal tariff on Indian imports is expected to adversely impact India’s gems and jewellery industry and deepen the crisis in India’s diamond polishing industry.
The United States accounted for roughly 30% of India’s gems and jewellery exports, valued at approximately $10 billion annually in 2023-24. Diamonds, natural and lab-grown, make up for a huge chunk of the sector’s exports.
Kirit Bhansali, chairman of Gems and Jewellery Export Promotion Council of India (GJEPC), warned that the 26% tariff, which would be imposed on Indian gem and jewellery exports when Trump’s reciprocal tariffs kick in, would place a significant burden on both Indian exporters and American consumers.
“While the tariff’s application to competing nations presents both challenges and opportunities, it is likely to significantly impact India’s diamond and jewellery sector…. In the long term, we foresee a reshaping of global supply chains. In the short run, we anticipate challenges in sustaining India’s current export volume of $10 billion to the US market. We urge the Government of India to progress the Bilateral Trade Agreement between India and the US, as it would be crucial in navigating the tariff issues and securing long term interest of the sector,” Bhansali said.
Industry experts said that if the two governments are not able to resolve the situation soon, it could push the diamond industry in Surat closer to a collapse. The second largest city in Gujarat, Surat processes nearly 85-90% of the world’s diamonds and employs over 800,000 workers.
Already, the industry has been reeling from a prolonged downturn, marked by factory closures, layoffs, and declining demand due to sanctions on Russian diamonds, softening of demand in key markets such as China, the Middle East, and Europe.and the competition from lab-grown stones.
Bharat Diamond Bourse vice-chairman Mehul Shah said the reciprocal tariffs announced by President Trump could negatively impact India’s diamond industry. “If buyers suddenly have to pay 26% more, it will remove them from the market,” he said, worrying that this could force many cutting and polishing units in Surat to close.
Shah, who also chairs the Gemmological Institute of India, said while some Indian companies may try to route diamonds through Dubai (which will only have a 10% duty), there would be challenges vis-a-vis certificates of origin and Dubai’s limited labour capacity for jewellery manufacturing.
As a short gap, Shah said the government should allow domestic sales from India’s gems and jewellery SEZs with some relaxations.
From April 2024 to February 2025, total gross export of gems and jewellery stood at $25.73 billion ( ₹2.17 lakh crore), registering a 13.43% decline in dollar terms and 11.77% in rupee terms compared to $29.72 billion ( ₹2.46 lakh crore) during the same period in 2023-24, according to data from the Gems and Jewellery Export Promotion Council (GJEPC).
During this period, overall gross imports fell by 13.31% in dollar terms and 11.69% in rupee terms, amounting to $17.50 billion ( ₹1.48 lakh crore) against $20.18 billion ( ₹1.67 lakh crore) in the previous year. Within the diamond segment, gross exports of cut and polished diamonds totaled $12.14 billion ( ₹1.02 lakh crore), marking a 18.01% decline in dollar terms and 16.37% in rupee terms compared to $14.80 billion ( ₹1.22 lakh crore) in 2023-24.
Similarly, gross imports of cut and polished diamonds saw a sharp drop of 35.21% in dollar terms and 34.11% in rupee terms, amounting to $1.16 billion ( ₹9,774.63 crore) against $1.79 billion ( ₹14,835.58 crore) in the previous year.
Meanwhile, gross imports of rough diamonds were down 26.18% in dollar terms and 24.78% in rupee terms, totaling $9.50 billion ( ₹80,090.86 crore) compared to $12.87 billion ( ₹1.06 lakh crore) in 2023-24.
The economic strain has exacted a devastating toll.
Bhavesh Tank, vice-president of the Diamond Workers Union Gujarat (DWUG), said he has submitted a list of 63 diamond workers who died by suicide over the past year to the Gujarat government. “The recession is breaking us, and this tariff could be the final blow,” Tank said.
DWUG has been on an indefinite strike since March 30, demanding financial aid, job security, and support for workers’ families.
On April 3, about 300 workers from RC Diamond company in Navsari, near Surat, joined the strike, seeking a pay hike as wages have dropped by up to 50% amid the downturn in the last three years. Tank noted that the Gujarat government promised to form a committee to address these issues, but progress remains elusive. “We’re still waiting for real help,” he said.
A Gujarat government official said that the authorities were working on a relief package for the diamond workers.
Diamond baron Savjibhai Dholakia of Hari Krishna Exports said the industry’s slim 2% profit margin makes absorbing a 26% tariff very challenging. “Diamonds aren’t essential commodities – buyers will simply shift to alternatives like gold,” he cautioned.
Dholakia suggested alternative strategies, including routing exports to the US through other countries. “Our industry has overcome many challenges before and employs lakhs of people – we’ll find solutions to this too,” he said.
Dinesh Navadiya, chairman of Indian Diamond Institute and spokesperson of Surat Diamond Bourse (SDB) said many diamond companies based in Surat already have offices in Dubai as well and could try to route the gems through the UAE. He said the higher tariff imposed on China and Thailand, which were India’s competitors, could be an opportunity for India.
“India currently imports only minimal quantities of rough diamonds from the U.S., attracting a modest 5% customs duty. A potential solution to the current challenge could be for India to negotiate a Free Trade Agreement (FTA) with the U.S. for the gems and jewellery sector—similar to agreements the UAE and Australia have secured. Such a deal could provide the industry with much-needed stability and growth opportunities,” he said.
