Jobs of 1.73 lakh workers in gems and jewellery trade hang in balance

Mint

2 days ago

Mumbai: The cancellation of trade talks between India and the US could jeopardize the jobs of 1.73 lakh workers in India's gems and jewellery sector in the current festive season, as per industry estimates collated by a commerce ministry-backed trade council.
The exports of natural cut and polished diamonds alone to the US could dip by as much as 80% or $1.2 billion (equal to 1.02 million carats) during August -November this year from $1.52 billion during the same time last year, shows a survey conducted by the Gem & Jewellery Export Promotion Council (GJEPC).
Prior to 9 April, when reciprocal tariffs kicked in, the US imported cut and polished diamonds (CPD) from India at nil duty, while currently they attract 25% duty. Similarly, studded jewellery was at 5-7% duty, but now sees as high as 32% import duty into the US.
US President Donald Trump's administration slapped a 25% tariff on Indian imports on 7 August and imposed a further punitive levy of 25% from 27 August for importing Russian oil. The total levy of 50% will exact a crushing blow on labour-intensive items exported to the US. The GJEPC survey has factored in a 25% tariff impact on the trade as the punitive tariff has not yet kicked in.
India cuts and polishes nine out of 10 of the world's rough diamonds and employs 9.59 lakh workers in Gujarat factories owned by diamantaires whose chief export destinations are the US, UAE, Hong Kong, and Belgium. Last fiscal year, diamond exports alone stood at $13.26 billion, accounting for over two-fifths of total gems and jewellery exports of $29.9 billion.
Gems and jewellery are among India's top export items, accounting for around 7% in the country's total exports of $437.51 billion in FY25, according to the commerce ministry data.
Industry sources said that the US, on average, accounts for 40% of India's exports of CPD.
Of the 1.73 lakh estimated job losses this season, 79,520 or 46% will be lost from the CPD trade alone—54,187 on natural diamonds and 25,333 on lab-growns. The rest will bekarigarsor artisans across Gujarat, Maharashtra and Rajasthan who manufacture studded jewellery, coloured gemstones, plain gold, silver and platinum jewellery, as per the survey.
The assumption of job loss on natural diamonds for August-November this fiscal year is based on the premise that 300 carats of rough yield 75 carats (25%) of polished for every worker each year. This translates into 75 carats of rough being processed by each worker in four months. With an expected 1.02 million carats of decline in polished diamonds (from 4.06 million roughs) to the US from August to November this year, 54,187 workers could lose their livelihood in the short term.
The same extrapolations have been made for lab-grown diamonds and other precious articles with different yields.
"We are the world's largest makers of polished diamonds, so the jewellery manufacturers in the US might have to consider moving their production capacities elsewhere if a deal with the Trump administration gets inordinately delayed," said Anoop Mehta, president of Bharat Diamond Bourse, India's leading diamond trading hub, and a DTC sightholder.
To be sure, small diamond manufacturing (0.5 carats and less), which is India's forte, cannot be replicated elsewhere easily, per GJEPC's ED Sabyasachi Ray. However, Ray added that the production capacity of diamonds exceeding 0.5 carats could shift to places like Israel if a trade deal with the US doesn't materialise soon.
GJEPC has sought the intervention of the commerce ministry in facilitating a targeted cash incentive for the trade and a moratorium on interest payments from the finance ministry.
Some of the measures include a targeted reimbursement mechanism for 25-50% of the additional US-imposed tariffs, applicable from August to December 2025, and a six-month deferment or moratorium from 1 August 2025 to 1 January 2026 on interest on working capital loans to ease the financial burden resulting from the abrupt imposition of the 50% tariff.
Key Takeaways About 1.73 lakh jobs in India's jewellery sector are at risk due to US tariffs.
Cut and polished diamond exports to the US could fall by 80%, or $1.2 billion, between August and November.
Tariffs on cut and polished diamonds are up from zero to 25%, with a potential total impact of 50%.
Industry leaders warn of production shifts to Israel and other countries.
Trade body GJEPC is pitching for cash incentives and interest moratoriums.