【Surat, India】Tariffs Impact the Diamond Capital – Industry Special Report – Commercial Times

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Editor’s Note

This article examines the dual pressures facing India’s diamond industry, where potential U.S. tariffs and shifting Chinese demand are driving a significant relocation of cutting and polishing operations. The trend underscores how trade policies can reshape global supply chains for critical commodities.

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Tariffs Drive Industry Relocation

Facing the threat of tariffs as high as 50% imposed by the Trump administration on India, coupled with weak demand from China, India’s diamond industry exports have hit a 20-year low. The annual export scale of India’s gems and jewelry is $28.5 billion, with the United States accounting for nearly one-third of that, making it the largest export market.

Over 80% of the world’s uncut rough diamonds are cut, polished, and finished in Surat. However, the threat of high U.S. tariffs has shaken buyer confidence, causing orders for the local diamond industry to dry up.

While smaller exporters have few options to mitigate the tariff impact, some larger players plan to shift part of their operations to countries like Botswana in southern Africa. Compared to the high tariffs imposed on India by the U.S., Botswana faces only a 15% tariff.

“U.S. tariffs will cause our company’s annual revenue to drop by 20% to 25%,” estimated Hitesh Patel, Executive Director of Dharmanandan Diamonds in India. Currently, they are taking a wait-and-see approach to the U.S. tariff threat. If the threat persists, they may increase production in Botswana.

The industry says that with high tariffs on India, U.S. buyers may turn to Israel, Belgium, and Botswana for supplies. Although Indian diamond exporters are trying to boost sales to Asia, Europe, and the Middle East to offset losses in the U.S. market, finding new buyers in these markets is not easy.

Currently, within the Surat Diamond Bourse, over 4,700 offices are for sale, with fewer than 250 still in use. Some companies are reconsidering their plans to move into the bourse.

A diamond company owner who wished to remain anonymous said he purchased an office in the bourse last year but has now shelved his plan to move in. Because U.S. tariffs have impacted his business, he no longer wants to go through the trouble of relocating his office from Mumbai to Surat.
Sharp Increase in Unemployment

The current desolate scene at the Surat Diamond Bourse is a world away from its grand opening in December 2023, when Prime Minister Modi praised it as a symbol of “the strength and new resolve of a new India.”

Every August, the industry in Surat typically works overtime to handle the Christmas and New Year order rush from the U.S. But this year, many jewelers are unsure if they can keep their jobs.

Shailesh Mangukiya, who runs a cutting and polishing workshop locally, said he has halved his workforce to 125 people due to the sharp drop in demand.
“The industry is continuously reducing working days and hours due to slowing demand,” said Shaunak Parikh, Vice Chairman of the Gem and Jewellery Export Promotion Council (GJEPC). If India cannot reach a trade agreement with the U.S. to lower tariffs, it could lead to 150,000 to 200,000 industry workers losing their jobs.

Indian diamond exporters say diamond companies are reducing purchases of rough diamonds and minimizing inventory to maintain cash flow. In this situation, small businesses with insufficient cash have begun to slash prices significantly to survive.

With poor exports, domestic demand in India has become a ray of hope for the industry.

“India has replaced China in recent years to become the world’s second-largest diamond market,” said Hitesh Shah, partner at Venus Jewel, an Indian diamond processor that supplies luxury brands including Tiffany and Harry Winston.
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⏰ Published on: September 15, 2025