【India】Losing its shine: Gems and jewellery industry sees slowdown in business, job losses from Trump tariffs

by

Editor’s Note

This article examines the impact of recent U.S. tariff announcements on India’s vital gem and jewellery sector. While the immediate threat is significant, a temporary pause offers exporters a critical window to adapt.

FILE PHOTO: A woman looks at a gold bangle inside a jewellery showroom at a market in Mumbai
Tariffs Threaten a Key Industry

Though Trump’s tariffs threaten India’s gem and jewellery industry, the 90-day pause period, starting April 9, has offered some respite to exporters.
The gem and jewellery industry in India, which was already grappling with reduced discretionary spending globally amid high inflationary pressures, faced another setback with Trump’s tariffs. The announcement of reciprocal tariffs on April 2—initially set at 26%—further jolted a sector that contributes nearly 7% to India’s total GDP and employs the largest skilled and semi-skilled workforce of over 5 million.
The US is a major buyer, accounting for 30.4% of India’s annual gems and jewellery exports. This amounts to approximately $10 billion, as per a Reuters report.
In FY25, India’s gems and jewellery exports declined by 11.72% to $28.5 billion. The Gem and Jewellery Export Promotion Council (GJEPC) has attributed this decline to geopolitical tensions.

A Temporary Respite and Lingering Concerns

Though Trump’s tariffs threaten India’s gem and jewellery industry, the 90-day pause period, starting April 9, has offered some respite to exporters. According to Kirit Bhansali, Chairman of GJEPC, it puts India on a level playing field with global competitors, at least temporarily, and allows the stabilisation of operations in the months ahead.

“But he cautions that the added cost of 10% on our products may lead to a short-term slowdown in demand in the US, as it will make jewellery products more expensive for the US consumers. ‘However, we remain optimistic that this window will help us realign and strengthen our position in the market,’ he says.”

The development is particularly challenging for MSME units, which comprise the bulk of the sector. Experts say that gems and jewellery exporters, including MSMEs, have already been struggling over the past few years due to changing customer preferences, lab-grown diamond technology, soaring gold prices, and competition from other countries in cutting and polishing.

“‘Reciprocal duties could further aggravate the situation. The sector being labour-intensive, a slowdown in exports could result in job losses for artisans, karigars and small-scale manufacturers,’ says Sanket Desai, Indirect Tax Partner-Consumer Products and Retail, EY India.”

Desai adds that the sector may also encounter challenges from other exporting countries facing higher US tariffs, such as South Africa, Sri Lanka, China and Thailand. These countries may potentially resort to dumping in India at significantly lower prices to utilise their existing manufacturing capacities and maintain global market share.

Impact on MSMEs and Diamonds

Adil Kotwal, President, SEEPZ Gems & Jewellery Manufacturers’ Association (SGJMA), shares similar concerns, predicting a difficult time for MSMEs in the trade, as they typically work on small margins.

“‘This means that business will slow down to some extent for the industry. Retailers in the US have enough inventory for the next three or four months, so they will buy only what they need. MSME units will find it difficult to make profit; cash flows will be impacted,’ he says.”

Kotwal adds that the impact on diamonds will be greater, as they now face a duty of 10%, compared to zero previously.

“‘We will need to see how to address this issue going forward. Both sides should negotiate for a Bilateral Trade Agreement (BTA) so that it is mutually beneficial for trade in the long run.'”

India plays a significant role in the global diamond industry, processing over 90% of the world’s diamonds. The country is the top global exporter of diamonds, and Surat, famously dubbed as the Diamond City of India, is renowned the world over as an iconic hub for diamond cutting and polishing.

Calls for Tariff Relief and Long-term Strategy

Ajesh Mehta, Convenor-Diamond Panel, GJEPC, says that they are rooting for diamonds to be taken as a raw material for jewellery manufacturing.

“‘We are urging the government to consider this proposal so that we can survive and push our diamonds without any duty to the US. While the reduction of the tariff from 26% to 10% is a big relief, it will still have an impact on jobs. The additional duty means that consumers will have to pay more, which would shrink their disposable spending and consequently impact jewellery demand. So, we expect a drop in sales of jewellery this year, as it is a luxury product and costly,’ he says.”

Elaborating further, Mehta says that the second quarter (April-June) is the slowest period for jewellery sales in the US, and he does not see any gains during this period.

“‘We don’t expect big sales in the short term, but as far as the long-term scenario is concerned, India does have the requisite skill set, and we can take a lot of jewellery business from China. However, all said and done, we want softer duties for the jewellery and diamond sector in India. We hope for some tariff reduction after 90 days for our sector, since it is a high-volume, low-margin game; we cannot afford to have such high tariffs on Indian jewellery,’ he emphasises.”
None
Full article: View original |
⏰ Published on: February 22, 2026