23 hours Ago By Yagnesh Bharat Mehta
Surat: The announcement of a reciprocal tariff of 27% by the US is likely to severely affect gems and jewellery exports from India. Industry leaders say they are monitoring the situation until April 9, when the announced tariff comes into force. A 10% tariff will come into effect from April 5.
Cut and polished diamonds earlier had 0% tariffs. India, being the largest cut and polished diamond manufacturer, polishing nine of every ten diamonds globally, and exporter, will face the greatest impact. The industry is hoping for a positive development between the two countries before the new tariffs come into force.
The natural diamond industry is meanwhile experiencing a crisis due to a drop in demand from the US and China, sanctions on Russian rough diamonds and affordable lab-grown diamonds. The tariff issue is likely to add to challenges even as the market has shown signs of improvement in the last three months. "From April 5, the base rate of 10% will come into force and is considered an ad hoc duty.
From April 9, the 27% tariff will come into force if no trade deal is reached," said an industry expert. In a statement, the Gems & Jewellery Export Promotion Council (GJEPC) said, "The Indian gems and jewellery industry, like the rest of the world, is trying to analyse the evolving global economic landscape due to the reciprocal tariff announcement by the US. GJEPC understands the US administration's intent to address trade and tariff imbalances through reciprocal tariffs; however, it urges the US to uphold the spirit of the longstanding trade partnership between India and the United States, which has been built on mutual respect and shared economic interests.
" "If negotiation does not work out, the new tariffs will have a significant impact on India as far as the gems and jewellery sector is concerned, as India is the largest cut and polished diamond manufacturer," the expert added. For cut and polished natural diamonds, the tariff in the US for India is 0%, while in India, it is 5%. Another major export from India to the US is studded gold jewellery, which is a key commodity affecting gem manufacturing as well.
In India, the tariff for the US is 20%, while in the US, the tariff for India is 5.50%. Top diamond manufacturers and leading exporters are unsure about their plans of action and are worried.
"The industry was showing signs of improvement after almost two years. With the US, being the biggest market for India, the tariff increase will have a serious impact," a manufacturer said. "The Trump administration's announcement of a 27% reciprocal tariff on Indian gems and jewellery exports will be a significant burden on Indian exporters and American consumers alike.
While the tariff application to competing nations presents both challenges and opportunities, it is likely to significantly harm India's diamond and jewellery sector — a cornerstone of its exports to the US. In the long term, we foresee a reshaping of global supply chains. In the short run, we anticipate challenges in sustaining India's current export volume of $10 billion to the US market.
We urge the govt of India to take forward the bilateral trade agreement between India and the US, as it would be crucial in navigating the tariff issue and securing the long-term interests of the sector," GJEPC stated..
