Ahmedabad: US President Donald Trump’s 26% adjusted reciprocal tariff on Indian imports is predicted to adversely affect India’s gems and jewelry trade and deepen the disaster in India’s diamond sharpening trade.
Craftsmen work on diamonds inside a diamond processing unit in Surat, on April 3 (REUTERS)
The USA accounted for roughly 30% of India’s gems and jewelry exports, valued at roughly $10 billion yearly in 2023-24. Diamonds, pure and lab-grown, make up for an enormous chunk of the sector’s exports.
Kirit Bhansali, chairman of Gems and Jewelry Export Promotion Council of India (GJEPC), warned that the 26% tariff, which might be imposed on Indian gem and jewelry exports when Trump’s reciprocal tariffs kick in, would place a major burden on each Indian exporters and American shoppers.
Diamonds are separated in a tray inside a diamond processing unit in Surat (REUTERS)
“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 mentioned.
Trade specialists mentioned that if the 2 governments should not capable of resolve the state of affairs quickly, it may push the diamond trade in Surat nearer to a collapse. The second largest metropolis in Gujarat, Surat processes practically 85-90% of the world’s diamonds and employs over 800,000 employees.
Already, the trade has been reeling from a chronic downturn, marked by manufacturing unit closures, layoffs, and declining demand resulting from sanctions on Russian diamonds, softening of demand in key markets reminiscent of China, the Center East, and Europe.and the competitors from lab-grown stones.
A craftsman checks the grading of a refined diamond within the grading division of a diamond processing unit in Surat (REUTERS)
Bharat Diamond Bourse vice-chairman Mehul Shah mentioned the reciprocal tariffs introduced by President Trump may negatively affect India’s diamond trade. “If buyers suddenly have to pay 26% more, it will remove them from the market,” he mentioned, worrying that this might pressure many chopping and sharpening models in Surat to shut.
Shah, who additionally chairs the Gemmological Institute of India, mentioned whereas some Indian corporations could attempt to route diamonds by Dubai (which is able to solely have a ten% responsibility), there can be challenges vis-a-vis certificates of origin and Dubai’s restricted labour capability for jewelry manufacturing.
As a brief hole, Shah mentioned the federal government ought to enable home gross sales from India’s gems and jewelry SEZs with some relaxations.
From April 2024 to February 2025, whole gross export of gems and jewelry stood at $25.73 billion ( ₹2.17 lakh crore), registering a 13.43% decline in greenback phrases and 11.77% in rupee phrases in comparison with $29.72 billion ( ₹2.46 lakh crore) throughout the identical interval in 2023-24, in keeping with knowledge from the Gems and Jewelry Export Promotion Council (GJEPC).
Throughout this era, general gross imports fell by 13.31% in greenback phrases and 11.69% in rupee phrases, amounting to $17.50 billion ( ₹1.48 lakh crore) in opposition to $20.18 billion ( ₹1.67 lakh crore) within the earlier yr. Inside the diamond section, gross exports of lower and polished diamonds totaled $12.14 billion ( ₹1.02 lakh crore), marking a 18.01% decline in greenback phrases and 16.37% in rupee phrases in comparison with $14.80 billion ( ₹1.22 lakh crore) in 2023-24.
Equally, gross imports of lower and polished diamonds noticed a pointy drop of 35.21% in greenback phrases and 34.11% in rupee phrases, amounting to $1.16 billion ( ₹9,774.63 crore) in opposition to $1.79 billion ( ₹14,835.58 crore) within the earlier yr.
In the meantime, gross imports of tough diamonds had been down 26.18% in greenback phrases and 24.78% in rupee phrases, totaling $9.50 billion ( ₹80,090.86 crore) in comparison with $12.87 billion ( ₹1.06 lakh crore) in 2023-24.
The financial pressure has exacted a devastating toll.
Bhavesh Tank, vice-president of the Diamond Staff Union Gujarat (DWUG), mentioned he has submitted a listing of 63 diamond employees who died by suicide over the previous yr to the Gujarat authorities. “The recession is breaking us, and this tariff could be the final blow,” Tank mentioned.
DWUG has been on an indefinite strike since March 30, demanding monetary help, job safety, and assist for employees’ households.
On April 3, about 300 employees from RC Diamond firm in Navsari, close to Surat, joined the strike, in search of a pay hike as wages have dropped by as much as 50% amid the downturn within the final three years. Tank famous that the Gujarat authorities promised to kind a committee to deal with these points, however progress stays elusive. “We’re still waiting for real help,” he mentioned.
A Gujarat authorities official mentioned that the authorities had been engaged on a aid package deal for the diamond employees.
A person on a bike rides previous the Surat Diamond Bourse (SDB), a diamond commerce centre positioned in Diamond Analysis and Mercantile Metropolis, often known as DREAM Metropolis, in Surat (REUTERS)
Diamond baron Savjibhai Dholakia of Hari Krishna Exports mentioned the trade’s slim 2% revenue margin makes absorbing a 26% tariff very difficult. “Diamonds aren’t essential commodities – buyers will simply shift to alternatives like gold,” he cautioned.
Dholakia steered various methods, together with routing exports to the US by different international locations. “Our industry has overcome many challenges before and employs lakhs of people – we’ll find solutions to this too,” he mentioned.
Dinesh Navadiya, chairman of Indian Diamond Institute and spokesperson of Surat Diamond Bourse (SDB) mentioned many diamond corporations based mostly in Surat have already got places of work in Dubai as effectively and will attempt to route the gems by the UAE. He mentioned the upper tariff imposed on China and Thailand, which had been India’s rivals, might be a possibility 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 mentioned.