India’s $32 billion gems industry struggles as US tariffs threaten exports

India’s $32 billion gems and jewellery industry is facing a significant downturn in exports as high US tariffs are expected to disrupt sales to its largest market, industry officials warn.

The United States has imposed a 26 per cent reciprocal tariff on Indian goods, including jewellery, marking a blow to India's hopes for trade relief under President Donald Trump’s global trade policy. The tariff has caused considerable concern among Indian manufacturers and exporters, who rely heavily on the US market, Caliber.Az reports via foreign media.

"The tariff is higher than expected," said Colin Shah, managing director of Kama Jewelry, one of India’s leading diamond jewellery manufacturers. "It is quite severe and will affect exports." India is the world’s largest center for diamond cutting and polishing, processing nine out of every ten diamonds globally. The United States is a key market, accounting for nearly $10 billion, or 30.4 per cent, of India’s total gems and jewellery exports, which reach $32 billion annually.

Gems and jewellery are India's third-largest export to the US, following engineering and electronic goods, and the sector supports millions of jobs in India. The industry has already been grappling with challenges due to weak demand from China, leading to a 14.5 per cent drop in exports, which totaled $32.3 billion in the 2023-24 fiscal year (April-March).

In light of the tariff setback, Shah suggested that a long-term trade deal with the United States could offer some relief. Both India and the US are in negotiations to secure an early trade deal.

"We're pretty hopeful that India could land a trade deal with the U.S. in the next few months. So, we just need to push through this tough phase for a little while longer," said Shaunak Parikh, vice chairman of the Gem and Jewellery Export Promotion Council (GJEPC).

India is the world's largest hub for diamond cutting and polishing, processing nine out of every ten diamonds globally. The US, in turn, accounts for nearly $10 billion, or 30.4 per cent, of India’s annual gems and jewellery exports. Gems and jewellery are India’s third-largest export to the US, with millions of workers employed in this sector.

However, in recent months, the industry has already been impacted by weak demand from China, leading to a 14.5 per cent decline in jewellery exports from India in 2023-2024, which dropped to $32.3 billion.

By Naila Huseynova