Editor’s Note
While recent media reports have linked new U.S. tariffs to a slowdown in Surat’s diamond industry, this analysis clarifies that the sector’s challenges predate these measures. The industry has been experiencing a downturn for nearly a year due to separate factors.
It is a fact that there is a slowdown in the diamond industry of Surat, but this situation is not new. This has been the situation for almost the last year and has not been caused by any tariffs.
US President Donald Trump imposed additional 25% tariffs on India, which came into effect on August 27, taking the total to 50% tariffs. The impact of these tariffs has been discussed in media for months. The additional tariffs were levied on India citing its purchase of oil from Russia.
As part of the same campaign, it is now being claimed that this tariff decision by Trump has had the biggest impact on India’s diamond industry and there is a possibility of a terrible recession, putting thousands of jobs at risk.
Surat is the center of India’s diamond industry. Diamonds are exported from here to the world, including America, generating business worth thousands of crores annually. It is not new knowledge that there is a significant recession in this industry in Surat.
Leading the charge of crediting Trump tariffs for this slowdown are media outlets like Reuters and BBC. Notably, their reporting is always suspect, especially on geopolitical issues affecting India. Later, Gujarati-Hindi media also picked up the issue and said Trump’s tariffs are creating this slowdown.
The BBC has published a report on the local industry in Surat. It shows the condition of diamond factories and says that many places used to employ a large number of people, but now the number has been reduced and employees have been laid off. The reason cited is that orders are not being received and due to this, employees are not being paid. In addition, many jewelers are complaining that their salaries have been reduced, or they are being removed from work, the report adds.
Quoting some individuals, it said that the jobs of more than one lakh jewelers are at risk and their future is bleak.
Reuters, in its report, has focused on the diamond bourse in Surat, which is always a target of the media. Even though Prime Minister Modi inaugurated it some time ago, it has not yet fully started. Reuters has linked this to the tariffs and claimed that most of the offices are empty. The report claimed that orders have now decreased due to the increase in tariffs.
Apart from that, the report has talked about the recession by quoting many small diamond businessmen. Apart from that, several other unnamed individuals have repeated the claims in the report.
After foreign media, articles have also been published in Gujarati media on this issue. Gujarat Samachar published an article on August 28 and claimed that Trump’s 50% tariff will put more than 50 thousand jobs in Surat’s diamond-textile industry at risk. The report claims that 30% of Surat’s diamond industry trade is with America, so Trump’s tariff could hit this industry hard.
From a larger perspective, this narrative is going to help America. Surat is the economic capital of Gujarat and Gujarat is the home state of Prime Minister Modi. The diamond industry has flourished in Surat over the years. If negative rumours are spread that Surat’s largest industry has been badly affected due to tariffs and changing global equations, then it works in Trump’s favour, suggesting he is really hurting PM Modi and his home state. However, we have to see that many of these things are not being reported in systematic context or using complete facts, and are directly or indirectly helping to set a wrong narrative.
It is a fact that there is a slowdown in the diamond industry of Surat, but this situation is not new. This is the situation for almost the last one year. Detailed reporting about this slowdown in the diamond industry can be seen in many reports during the last eight to ten months. At that time, Joe Biden was the President of USA, and there was no discussion about tariffs in global politics.
Secondly, it is not that the diamond industry will be affected insignificantly due to the tariffs of America, but it is also a fact that Indian diamond businessmen have the upper hand in this. Moreover, India has the option of other markets, while America does not have other suppliers who can export diamonds at that scale. There is high demand for diamonds in America, which only the Indian diamond industry can meet.
As far as the Diamond Bourse is concerned, it has been questioned ever since its inauguration, because many offices have not been opened there yet. Whatever the reasons, it is a separate discussion, but the tariff and the fact that the offices in the bourse are not functioning have nothing to do with it. Even when the tariff issue was not there, Diamond Bourse’s situation was the same as it is now. The reality is that the government is making continuous efforts to keep this bourse running.
The article concludes by questioning the media narrative, suggesting experts dismiss the direct causal link between the recent tariffs and the longstanding downturn in Surat’s diamond industry.
