New tariffs announced by the US threaten to cripple India’s gem and jewellery exports, putting thousands of jobs at risk.
The US, which accounts for more than 30% of the South Asian country’s gem and jewellery exports, has imposed a 27% tariff. This comes as jewellery demand in other key markets including China, the Middle East and Europe has fallen.
The tariffs will hit US diamond demand hard, and job losses look inevitable, at least in the short term, according to Dinesh Navadiya, chairman of the Indian Diamond Institute of Surat.
Surat, the second-largest city in the western state of Gujarat, cuts and polishes more than 80% of the world’s rough diamonds, and India as a whole accounts for nine out of 10 of the world’s polished diamonds. Business in the booming diamond market, where more than 10,000 traders and brokers gather daily, has come to a standstill as the industry tries to figure out how things will play out in the coming months.
Industry experts estimate that the situation is worse than during the 2008 financial crisis, when the industry was gripped by fears of a prolonged recession. The slowdown in the industry will affect all producers, but smaller players will be the hardest hit, as they will be forced to exit the market.
India’s total merchandise exports to the US in 2024 were about $74 billion, of which $8.5 billion were pearls, gems, and jewelry. India exported $6.69 billion worth of diamonds to the US alone in 2024, according to Rapaport archives based on US International Trade Commission data.
The US accounts for more than 30% of India’s gem and jewelry exports. It is India’s third-largest export to the United States after engineering and electronics, employing millions of workers, including artisans.
The worsening business outlook also raises questions about the future of the Surat Diamond Bourse, which opened in 2023 to create thousands of new jobs and act as a trading hub.
The industry is preparing to look for alternative markets to offset the loss of US demand, but no other country can replace the US market.
Before US President Donald Trump announced the new tariffs, rough diamonds from India were not subject to import duty when entering the US, while the duty on gold jewellery was between 5.5% and 7%.
India levies a 5% import duty on polished diamonds and 20% on gold, silver and platinum jewellery.
Hélène Tarin, Editor-in-Chief of the Asian Bureau, Rough&Polished
Produced and published as part of the project "Best practices have a voice"
