Tariff cuts lower costs for US importers, provides relief to diamond jewellery manufacturers, boost competitiveness of Indian diamond jewellery
After the reciprocal United States tariffs disrupted trade flows to USA sharply for the country’s gem and jewellery sector, the US-India trade deal offers vital relief to the sector with tariff reduction from 50 per cent to 18 per cent. Tariff cuts lower costs for US importers, provides relief to diamond jewellery manufacturers, boost competitiveness of Indian diamond jewellery, revive demand and stabilise operations.
“Bringing duties down from 50 per cent to 18 per cent restores the competitiveness exporters had temporarily lost and creates a level playing field in one of our largest markets. With the US contributing nearly a third of industry demand, this relief directly improves margins, cash flows, and capacity utilization across cutting, polishing, and manufacturing centres,” stated Rajeev Toshniwal, Chief Financial Officer, Kisna Diamond and Gold Jewellery.
The US remains India’s largest gem and jewellery export market, accounting for 31 per cent (USD 9.23 billion) of total exports in the financial year 2024–25, as per the data by the Gem And Jewellery Export Promotion Council (GJEPC). On Monday, the United President Donald Trump notified through a Truth Social post that both the countries have finalised the trade deal, which would bring the tariffs for the Indian goods down to 18 per cent.
“Key sectors that will benefit India include manufacturing, electronics, defence production, pharmaceuticals, textiles and apparel, gem and jewellery, agri-products, renewable energy, and digital services. Indian exporters, traders and entrepreneurs will gain from reduced trade barriers, improved market access and stronger technology collaboration,” stated Praveen Khandelwal, BJP MP and Secretary General, Confederation of All India Traders (Cait).
Disruptions To The Trade
In 2025, reciprocal US tariffs disrupted trade flows to USA sharply. Duties on polished diamonds and coloured gemstones surged from 0 per cent to 10 per cent in April, then to 50 per cent by August, unviable for these raw materials, which strained working capital, liquidity, and margins. Jewellery duties jumped from 5 to 7 per cent to 55 to 57 per cent, as per the industry experts.
“GJEPC is optimistic that based on India signing the trade deal loose diamonds and coloured gemstones from India will get the benefit of zero duty imports in USA vide Annexure 3 of the US reciprocal tariff list, providing much-needed support for diamond exports. This will enhance trade flows, rebuild confidence and deliver a strong sector-wide boost,” highlighted said Kirit Bhansali, Chairman, GJEPC.
The high tariffs led to a 44.42 per cent plunge in India’s gem and jewellery exports to the US from April to December 2025 (USD 8,691.25 million to USD 3,862.08 million), with key categories hit hard. Cut and polished diamonds (-60.11 per cent) , studded gold jewellery (-24.54 per cent) and plain gold jewellery (28.89 per cent) were the most affected categories, GJEPC data revealed.
A Much-needed Course Correction
From a finance perspective, industry experts expect stronger order visibility, healthier working capital cycles, and renewed investments in technology, design and skilled employment. Beyond near-term recovery, the agreement supports deeper supply-chain integration and sustainable export growth, the leaders noted.
“Over the past few months, elevated tariffs created uncertainty, disrupting buying cycles, impacting order flows, and compressing margins for exporters who were forced to either absorb costs or risk losing competitiveness at the retail counter. A lower and more stable tariff environment restores predictability for forward contracts, inventory planning, and shipment timelines, which are closely tied to seasonal demand,” pointed out Namita Kothari, Founder, Akoirah by Augmont.
Experts added that it is also a timely move for the laboratory-grown diamond (LGD) ecosystem, with LGDs gaining market share, especially among younger consumers. Improved tariff economics can support shipment momentum and offer relief to manufacturers operating on thin spreads.
Unrealised Export Potential
Adopting a cluster-focussed approach for addressing gaps in policy, infrastructure, technology, and finance can help propel India’s gem and jewellery exports to USd 75 billion by 2030, as per a joint study by the Export-Import Bank of India (Exim Bank) and the GJEPC.
The study, titled ‘making gem and jewellery clusters exportable’, identifies and benchmarks 17 district-level clusters with high potential for exports. Among these clusters, Mumbai Suburban emerged as the top-performing cluster, while Surat, Mumbai, Kolkata, and Jaipur were identified as frontrunners.
India has an unrealised export potential of USD 38 billion in the gem and jewellery sector. To tap this opportunity, the study recommends diversifying into high value-added product segments such as diamond studded jewellery, lightweight gold jewellery, luxury smart jewellery, imitation jewellery, synthetic gemstones, astrology-inspired designs and cultured pearls.
Exploring Key Markets
Despite the sharp contraction in the US market, India’s overall gem and jewellery exports remained stable during April to December 2025. Provisional exports for the nine-month period aggregated USD 20.75 billion, reflecting a marginal dip of 0.41 per cent year-on-year, while registering a 3.69 per cent growth in rupee terms, supported by currency movement and steady trade flows.
GJEPC noted that the near-flat performance highlights market stabilisation, with strong growth in jewellery exports, particularly gold, silver and platinum jewellery, offsetting moderation in cut and polished diamonds and lab-grown diamonds.
A key stabilising factor has been the industry’s ability to leverage Free Trade Agreements (FTAs) and deepen its presence in alternative markets. Exports to the United Arab Emirates rose 28.08 per cent YoY to USD 6.89 billion, while shipments to Hong Kong increased 28.19 per cent to USD 4.25 billion. Exports to Australia also recorded strong growth, rising 39.83 per cent to USD 277.76 million.
While the tariff relief signals a much-needed course correction for a sector hit by severe trade disruptions, industry stakeholders note that the full impact will depend on the fine print of the agreement, including rules of origin, product coverage, and implementation timelines.
