Faced with recently imposed tariffs by the United States, Indian diamond and jewelry exporters are contemplating establishing production units in countries with more favorable trade relations to maintain their competitive edge in the American market. The US currently has a 50% tariff on Indian diamonds and gems, which took effect on August 27, 2025.
Hetal Vakil Valia, former National Chairperson of the India Bullion and Jewellers Association (IBJA) women's wing, stated that exporters are exploring the possibility of partial manufacturing in India, with final processing taking place elsewhere to avoid the heavy tariffs. Yogesh Mudras, Managing Director, Informa Markets, mentioned that industry players are also investigating alternative export markets in Europe, Southeast Asia, and the Middle East. He added that some are considering rerouting jewelry through semi-processing in India before sending it to countries like Oman for full processing and subsequent export to the US.
Prasoon Dewan, Scientific Gemologist and CEO of Divish Aurum Private Limited, which exports to markets in Europe and other geographies, highlighted that policy changes and tariff risks are inherent in the export business.
The US has historically been the largest importer of Indian diamonds. However, the imposition of heavy tariffs has caused concern within the industry. One exporter noted that 30% of their export business was with the U.S. alone, and that has now ceased. Approximately 70% of jewelry manufactured in Andheri SEEPZ SEZ was destined for the USA.
The Gem & Jewellery Export Promotion Council (GJEPC) has been actively involved in addressing the crisis. Kirit Bhansali, chairperson of the GJEPC, emphasized the need to strengthen India-Saudi ties in the gem and jewelry sector, noting the projected growth of Saudi Arabia's jewelry market. Dinesh Lakhani, Group Director of Kiran diamonds, expressed optimism about overcoming the challenges and continuing to explore new markets while hoping the U.S. reverses its tariffs.
The industry is exploring various strategies to mitigate the impact of the tariffs. These include targeting new markets in West Asia, Europe, Southeast Asia, and the Middle East. Some exporters are considering sending semi-finished diamonds to countries like Oman for final processing before exporting them to the US. Latin America and Eastern Europe are also being considered as potential growth areas.
The imposition of tariffs has already had a discernible impact. August saw a decline in polished diamond exports, with overall gross exports of cut and polished diamonds dropping 6% compared to the same month last year. However, plain gold jewelry exports saw a surge, driven by higher gold prices. Experts suggest that the decline in studded jewelry exports is a key factor behind the overall drop in diamond shipments.
Prior to the tariffs taking effect, there was a surge in exports to the US as manufacturers attempted to beat the deadlines. However, the industry is now seeking government support to navigate the challenges. The GJEPC has requested measures such as extended credit timelines, a moratorium on installment payments, and interest equalization. They have also proposed a reimbursement mechanism for a portion of the additional US tariffs and enhanced market access assistance.
The situation is particularly concerning for Surat, which handles a significant portion of India's diamond exports. Small businesses in Surat are bearing the brunt of the tariffs. The industry employs a large number of skilled artisans, and there are worries about potential job losses. Some experts believe that the US has no viable alternative to India for loose diamonds and that prices in the US will eventually rise, with buyers absorbing the difference.
Despite the challenges, the Indian diamond industry has a history of turning challenges into opportunities. With its skilled workforce and dominant position in diamond cutting and polishing, the industry is determined to find a way forward.
