Trump Tariff hits hard – India’s gems & Jewellery exports likely to see a 75% decline

Mumbai: The recent increase in US import tariffs on gem and jewellery (G&J) products from India has led to a significant disruption in bilateral trade. Effective from August 27, 2025, the US has imposed a 50% tariff on various gems & jewellery commodities, including cut and polished diamonds, lab-grown diamonds, gold, silver, platinum, and imitation jewellery. Previously, these products attracted tariffs ranging from 0% to 13.5%, depending on the item, which inflated to 25% commencing 1st August 2025.

As a result, India’s exports to the US have already experienced a steep decline of ~50% during the first quarter of FY2026 (April to June 2025), from an average of $2.97 billion (2022–2024) to $1.49 billion. The most affected categories included cut and polished diamonds (down 64%), lab-grown diamonds (45%), coloured gemstones (53%), and gold jewellery (20%).

Looking ahead, the impact is expected to worsen during the peak export season (August–November 2025), with total exports projected to fall by about 75%. Exports of key products that are in high demand in the USA, like cut-and-polished diamonds, are likely to drop significantly by 96%, followed by lab-grown diamonds by 68%, and gold jewellery by over 30%. Silver jewellery remains an outlier, with a slight positive growth of 3.15% expected.

Overall, the estimation predicts that India’s total gems & Jewellery exports to the US could fall from $11.18 billion to $2.76 billion, indicating an overall loss of $8.42 billion. Of this, approximately $5.95 billion is attributed to direct export loss (negative trade creation), while $2.47 billion represents trade diverted to competing nations.

It is important to note that in the gold jewellery segment, the average tariff levied on six of India’s major competing nations stands at 18.5%, while India faces a 25% tariff, resulting in a duty gap of 6.5%, which can further hamper India’s trade dynamics.

For cut and polished diamonds, the average tariff applicable to nine key competitor countries is 20.88%, compared to 25% for India, highlighting a differential of 4.12%.

In the case of lab-grown diamonds, exporters from eight competing countries will face an average tariff of 19%, again placing India at a 6% disadvantage under the prevailing U.S. tariff structure.

Similarly, in silver jewellery, the average duty across eight major competing nations is 21.37%, while Indian exporters are subject to a 25%, marking a 3.63% gap.

Commenting on the same, Mr. Colin Shah, MD, Kama Jewelry, said, “This situation is expected to result in severe economic repercussions, especially for employment. An estimated 125,000 jobs may be lost over the next 4–5 months, largely impacting workers in Surat and Mumbai who are engaged in diamond cutting and polishing, and jewellery manufacturing.
The two countries are negotiating a bilateral trade agreement (BTA), which will ideally conclude by fall (October-November) this year. Unless a trade agreement is negotiated, these punitive tariffs will continue to severely impact India’s gem and jewellery sector, with far-reaching effects on exports, employment, and global competitiveness. We hope the government will take up the much-delayed SEZ reforms and step-up measures which will boost ecommerce globally as the industry will have to take up market diversification urgently.  There is also a dire need for FTAs with other developing markets, especially the BRICS. Alongside, we are hopeful that the Government will also allocate large budgets for promoting the “Make in India” brand globally and help address this economic uncertainty.”