Gem and jewellery, apparel exporters brace for ‘severe' impact of U.S. tariff

The Hindu

5 days ago

U.S. President Donald Trump's decision to levy a 25% tariff as well as secondary sanctions on exports from Indiafrom August 1 would have severe impact on India's gem and jewellery industry and also make Indian apparels up to 10% expensive than their competitors, the trade bodies said.
Kirit Bhansali, Chairman, Gem & Jewellery Exports Promotion Council (GJEPC) said, 'If implemented, this move could have far-reaching repercussions across India's economy, disrupting critical supply chains, stalling exports, and threatening thousands of livelihoods.'
'The Indian gem and jewellery sector, in particular, stands to be severely impacted. The U.S. is our single largest market, accounting for over $10 billion in exports—nearly 30% of our industry's total global trade,' he said
'A blanket tariff of this magnitude will inflate costs, delay shipments, distort pricing, and place immense pressure on every part of the value chain — from small karigars to large manufacturers,' he said. He said such extreme measures undermine decades of economic cooperation and the U.S. administration must reconsider its decision. 'We call on both governments to engage in constructive dialogue that safeguards bilateral trade and protects the millions of jobs that depend on it on both sides,' he added.
Commenting on the India-U.S. trade deal, Rahul Mehta — Chief Mentor, Clothing Manufacturers Association of India (CMAI), said, 'Whilst the announced levy of 25% does come into effect, it will indeed be a surprising twist to our expectations on the way the trade talks were proceeding.'
'However, having seen the several about turns on the tariff front in the case of other countries, I would not press panic buttons right now. But, if the proposed terms do come into effect, It will make our products 7% to 10% more expensive than some of our competitors, and it will certainly hurt our apparel exports to the U.S.,' he said. 'Fortunately, this set-back has come at the time when we have just signed an FTA with U.K., and proceeding rapidly with an FTA with EU. So, it is tough time, but not beyond our ability to face,' he added.
Aditi Nayar, Chief Economist, ICRA, said the U.S. tariff will pose a headwind to India's GDP growth.
'When the U.S. had initially imposed tariffs, we had lowered our forecast of India's GDP expansion to 6.2% for FY26, presuming a tepid rise in exports and delay in private capex,' she said.
'The tariff (and penalty) now proposed by the US is higher than what we had anticipated, and is therefore likely to pose a headwind to India's GDP growth. The extent of the downside will depend on the size of the penalties imposed,' she added.