Mumbai (Gems2jewellery.com Exclusive): India’s Gem and Jewellery (G&J) sector has long dazzled global markets, not just with its sparkle but with the millions of livelihoods it sustains. From the diamond polishing units of Surat to the gold jewellery workshops of Mumbai and Jaipur, this industry has been the backbone of India’s export story. But today, that glitter is under threat. The United States — India’s single-largest buyer of gems and jewellery — has pulled the rug from under the sector with punitive tariffs that could cost billions and put tens of thousands of artisans out of work.
The Tariff Shock:
Earlier this month, Washington imposed a 25% “reciprocal” duty on all imports from India, on top of the normal Most Favoured Nation (MFN) rates. And as if that wasn’t damaging enough, the surcharge will double to 50% starting August 27, 2025. For an industry that was already operating on thin margins, this escalation could be devastating.
Take gold jewellery. Until now, a gold bangle exported to the U.S. faced an MFN duty of about 5.5%. By the end of this month, the same piece will attract a crippling 55.5% tariff. Even polished diamonds, which traditionally entered the U.S. duty-free, will now carry a 50% tax bill simply because they come from India.
“This is not just a tariff, it is a market lockout,” one Mumbai-based exporter lamented in a trade forum. “American buyers will simply turn to competitors in other countries. How do we survive when our products become 50% more expensive overnight?”
Why It Hurts So Much:
The U.S. isn’t just another market for India’s jewellers — it is the market. In FY 2023–24, India exported US$ 32.85 billion worth of gems and jewellery, of which US$ 9.95 billion — roughly 30% — went to the U.S.. In 2024 alone, India supplied over US$ 11.5 billion to American buyers, representing nearly 13% of U.S. jewellery imports.
In other words, every third diamond or piece of jewellery leaving India is headed to the United States. Cutting off or even slowing this channel is like shutting down the oxygen supply to the industry.
Counting the Cost:
Industry bodies estimate that the sector could lose US$ 5–8 billion in exports in the first full year of the 50% tariff. Shipments to the U.S. may fall from nearly US$ 10 billion to just US$ 2–3 billion, a collapse of up to 80%. Already, some categories like cut and polished diamonds have seen orders shrink by four-fifths.
The human cost is equally stark. Between 125,000 and 173,000 jobs are at risk, particularly in Surat, where entire communities depend on diamond cutting and polishing, and in small-scale jewellery units across the country. “We are staring at mass closures,” warned a Surat-based trade union leader. “The smallest workshops will be the first to shut, but the shockwaves will be felt throughout the chain.”
A Double Bind:
The tariff storm comes at a time when exporters are already grappling with G7 restrictions on Russian-origin diamonds, which require complex documentation to prove country of mining. The withdrawal of GSP trade preferences in 2019 had already raised costs. For many small and medium-sized exporters, the combination of tariffs, compliance hurdles, and shrinking orders could be unbearable.
What Next?
Some exporters are front-loading shipments ahead of the August 27 deadline, while others are exploring alternative markets in the UAE, Europe, and Southeast Asia. A few are considering shifting parts of their production chain abroad to bypass tariffs — though that raises questions of feasibility and rules of origin.
Yet the industry’s mood is grim. As one leading trade official put it, “Diversification is a strategy for the long term. But in the short term, no market can replace the U.S.”
A Moment of Reckoning:
The U.S. tariffs are more than just a trade dispute; they are a moment of reckoning for India’s gem and jewellery industry. The sector, which has weathered currency swings, demand cycles, and even pandemic disruptions, is now confronted with a structural barrier in its most important market.
Unless urgent diplomatic engagement yields relief, or exporters find ways to innovate and re-route, the sparkle of India’s gem and jewellery story may dim — taking with it billions in exports and the livelihoods of thousands of artisans.
For an industry built on brilliance, this is perhaps its darkest hour.
Posted by Suresh Chotai
