Editor’s Note
This article examines the human impact of global trade tensions, focusing on India’s diamond industry in Surat. As U.S. tariffs threaten key sectors, workers like veteran polisher Jagdish Prajapati face an uncertain future, illustrating the potential for widespread job losses.
Key sectors of India’s economy are facing economic difficulties due to a further increase in US tariffs. Widespread job losses could be the consequence.
Jagdish Prajapati sits in the grimy Sarthana alley in Surat, polishing a rough diamond. The city of millions in the western Indian state of Gujarat is considered the world’s largest center for diamond processing. Prajapati – in the business for 20 years – is now worried like many of his colleagues in the old city:
On August 27, additional US punitive tariffs of 25 percent on Indian textiles, auto parts, shoes, and pharmaceutical exports – and indeed also on gemstones – are set to take effect. Added to the existing tariffs, this will result in an effective tariff rate of 50 percent. India must now, along with Brazil, bear the highest tariff rate for exports to the USA to date.
This also affects the diamond city of Surat.
According to the industry union “Diamond Workers Union Gujarat,” 800,000 to one million polishing craftsmen are employed in around 6,000 diamond polishing workshops. Most of them do not have a permanent employment contract with the employer and are only used as needed.
The USA is the largest single market for diamonds processed in India. Gemstones worth over ten billion US dollars are exported to the USA annually. This accounts for almost 30 percent of global diamond trade, says Kirit Bhansali, Chairman of the Gem & Jewellery Export Promotion Council, a lobbying organization.
Almost every second polished diamond from India goes to the USA.
India has to pay such high punitive tariffs for exports to the USA because the most populous emerging country is under criticism for importing Russian crude oil at favorable prices. India intends to cover the immense energy demand in the country this way. Russia is currently the largest single exporter of oil to India.
For Washington, however, such energy deals are an indirect financing of the Russian war of aggression against Ukraine. The West has, in response to this internationally illegal war of aggression, collectively sanctioned Russian energy products.
Just in February, India’s Prime Minister Narendra Modi and US President Donald Trump met at the White House shortly after the latter’s inauguration to discuss trade issues. They agreed to double bilateral trade to 500 billion US dollars by 2030.
However, the pressure from Trump on India to stop its oil imports from Russia and to comply with sanctions against Iran has severely strained relations between Washington and New Delhi.
In the Tiruppur district in the southern state of Tamil Nadu, more than a million people work in the textile industry and related trades. The region is known worldwide as a location for the cotton industry, with numerous knitting mills, bleaching plants, and other workshops. Zippers and buttons are also manufactured there. As business has been good so far, the city’s population has constantly grown.
About 30 percent of exports from Tiruppur go to the USA, particularly in the area of cotton and knitwear. According to export associations, exports to the USA reached a volume of 5.1 billion US dollars in the last fiscal year 2024.