Editor’s Note
**Editor’s Note:** This article examines the implications of the recently concluded India–EU free trade agreement, which grants zero-duty access for the gems and jewellery sector across 100% of trade value. As New Delhi pivots to boost labour-intensive exports, the sector stands to gain significant relief from previous tariff barriers, including steep US duties.
Gems and Jewellery
With negotiations for a free trade agreement between India and the European Union (EU) concluding yesterday, New Delhi is turning its focus to boosting exports from labour-intensive sectors. Among those expected to benefit most is the gems and jewellery (G&J) sector, which has been struggling under steep 50% tariffs in the United States.
From tariffs of up to 4% previously to gaining preferential access across 100% of trade value, India’s $2.7bn jewellery exports are likely to become competitive through the FTA in a $79.2bn import market.
Bilateral trade between India and the EU reached $5.2bn, with exports at $2.7bn (8.92% of total) and imports at $2.5bn. EU jewellery imports from India remain limited at $628mn, of which $573mn is precious jewellery and $55mn is fashion jewellery—these currently attract 2-4% duties—leaving the market dominated by non-FTA competitors.
The deal aims to double bilateral trade to $10bn within three years. Zero-duty access to the world’s largest consumer market empowers export hubs in Gujarat, Rajasthan, Maharashtra and West Bengal to ramp up shipments of precious jewellery (plain and studded), silver, and imitation jewellery—capitalising on India’s renowned design prowess.
The Gem & Jewellery Export Promotion Council (GJEPC) also hopes that it will help Indian exporters salvage lost ground, especially when exports to the US are down by 44%.
For decades, the US sat at the heart of India’s gems and jewellery export strategy — its largest market, the price setter for polished diamonds and the anchor for volume-led growth. That dependence, however, is now easing, not by design but by compulsion.
India’s G&J sector is operating under sustained pressure as geopolitical tensions rise and consumer demand softens across key overseas markets. Valued at $28.7bn in FY25, the industry is already feeling the impact of steep 50% tariffs imposed by the US.
It registered a 4.98% decline in December 2025, totalling $1,883.85mn. This near-flat performance compared to $1,982.62mn in December 2024 reflects ongoing market stabilisation. During April-December 2025, total exports remained steady at $20,751.28mn, a marginal decrease of 0.41% from the previous year.
As Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget 2026 on Sunday, industry leaders have recommended the introduction of a liberalised and predictable taxation regime on foreign mining companies operating in Special Notified Zones.
Key proposals include allowing reverse job work for domestic orders during export slowdowns, permitting clearance of unsold inventory into the Domestic Tariff Area on payment of duty, and introducing a ‘Bill to Ship to’ mechanism to simplify logistics. These measures aim to prevent idle capacity, protect skilled jobs and improve business resilience.
India has gained preferential access to the European markets across 97% of tariff lines, covering 99.5% of trade value. 70.4% of tariff lines covering 90.7% of India’s exports will have immediate duty elimination for important labour-intensive sectors including the G&J.
By Devabrata Dutta
Published At: 28 January 2026 3:05 pm
