【India】India-US Trade Deal Sparks Hope for Gems and Jewellery Industry

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Editor’s Note

This article discusses the immediate market reaction to the newly announced India-US trade deal, which is expected to significantly reduce tariffs on Indian gems and jewellery exports.

Gems and jewellery are India’s fourth-largest export category to the US. (REUTERS)
Tariff Reduction and Market Reaction

Mumbai/Bengaluru: The India-US trade deal, announced Monday, has raised hopes in the Indian gems and jewellery industry, with tariffs on shipments to the US expected to fall sharply from 50% to 18%.

Jewellery stocks rallied on the news, tracking gains in the broader market. Shares of Kalyan Jewellers jumped over 6% in morning trade, while Titan rose about 3.6%.

US President Donald Trump shared initial details of the agreement on his social media platform Truth Social, saying Indian imports into the US would face an 18% levy, down from the steep 50% imposed in 2025 following India’s purchases of Russian oil.

“We are not sure, but we hope that this trade deal also brings in zero duty on diamonds,” Sabyasachi Ray, executive director of the Gems and Jewellery Export Promotion Council (GJEPC), an industry body, told Mint. “That will be a huge bonanza to the industry.”

The GJEPC has been pushing for a return to zero tariffs on diamonds polished in Surat and exported to Europe as an input for jewellery made for American consumers.

Export Data and Industry Impact

Data from the commerce and industry ministry shows India’s diamond exports to the US fell more than 58% year on year between April and November 2025 to $1.36 billion, while overall jewellery exports fell by nearly 44% to $3.55 billion in the same time period.

Gems and jewellery are India’s fourth-largest export category to the US.

“One million people are engaged directly in the diamond sector, so all were affected,” GJEPC’s Ray said. “And they were really badly affected. Their wages have gone down,” he said, adding that the meteoric rise of lab-grown diamonds has helped offset some of the widespread job losses, although it has hit wages in the sector.
Analyst Estimates and Broader Implications

However, details of the deal are yet to come through.

“We estimate the effective tariff rate on India might be just around 12-13% as per our estimates, down from almost 30-35% previously,” Bank of America’s brokerage arm wrote in a note on Tuesday. “This would provide significant relief to India’s export sector, especially labor intensive areas such as gems & jewelry, textiles, agricultural products and engineering goods.”

There is also hope that the reduced US tariffs will help repair the supply chain of diamonds from Surat to Belgium to the consumer markets in the US.

“One of the biggest beneficiaries of the India-EU trade deal which got signed on 27 January is Belgium, which is a big hub for the diamond industry,” Anil Talreja, partner at Deloitte India, told Mint. “So that takes care of the supplier side. Now, the US is on the demand side. We are waiting for the administrative order to see exactly which sectors and articles will get impacted [by the US trade deal], but the positive sentiment, in my view, will take care of the demand side to a great extent.”
Competitiveness and Future Outlook

The tariff cut will improve India’s competitiveness in gems and jewellery without drastically changing end-demand fundamentals, according to Madhur Singhal, managing partner (consumer and internet) at consultancy Praxis Global Alliance.

“This is likely to support mid-single-digit incremental growth in US-bound exports, driven more by order recovery and better conversion rather than fresh demand creation,” Singhal said.

The US accounts for roughly 30-35% of India’s total gems and jewellery exports, making it the single largest market for the sector. The tariff cut is therefore likely to support incremental market-share gains, particularly in studded gold and natural diamond jewellery, where India already has strong scale and integration advantages, Singhal told Mint.

However, exporters are unlikely to retain the full tariff benefit.

“The more durable impact is margin stability rather than margin expansion, through improved order visibility, lower pricing volatility, and better working-capital discipline,” Singhal said.

Demand in the US is expected to strengthen over the coming quarters, said Richa Singh, managing director of Natural Diamond Council, an industry body representing diamond miners around the world.

“Higher tariffs had pushed up prices, leading to cautious buying. The reduction restores price competitiveness and helps natural diamonds compete more effectively.”
“This rebound is likely to be supported by renewed exporter confidence, along with stronger marketing efforts around authenticity and transparency,” Singh added.
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⏰ Published on: February 03, 2026