US tariff hikes slash diamond jobs in Gujarat, hit Rajasthan gems trade

Business Standard

5 days ago

Gujarat's diamond industry is facing one of its worst employment crises in recent years after the US sharply raised import tariffs on Indian gems and jewellery, according to a report by The Economic Times. Close to 100,000 workers engaged in cutting and polishing diamonds in Saurashtra have lost their jobs since April, when the US imposed a baseline 10 per cent tariff.
The situation worsened in the past 10 days as the tariff was hiked to 25 per cent and then doubled to 50 per cent.
The layoffs have mainly affected small units in Bhavnagar, Amreli and Junagadh, which depend on job work from larger companies to cut and polish rough diamonds. These units typically employ workers earning ₹15,000-₹20,000 per month. Industry representatives say many export orders from US buyers have been cancelled or put on hold, leaving production lines idle.
India is the world's largest diamond cutting and polishing hub, with nearly 90 per cent of global diamonds processed in the country. The US and China are the biggest markets for Indian diamonds.
From April 2024 to March 2025 (FY25), India exported gems and jewellery worth $10 billion to the US, led by cut and polished diamonds and diamond-studded jewellery.
Lab-grown diamond also at risk
While some displaced workers are finding employment in the lab-grown diamond (LGD) sector, industry leaders caution that this segment is also at risk. The US is the largest market for LGDs, and the 50 per cent tariff could hit this business as well, The Economics Times report added.
Large exporters are avoiding public comment on job losses to prevent backlash from stakeholders, but several admit that reduced orders could lead to temporary layoffs, shorter shifts, or even further downsizing. Some US buyers are reportedly considering shifting jewellery manufacturing to countries such as Vietnam and Thailand, where tariff rates are lower.
The industry has urged the government to fast-track bilateral trade negotiations with the US to remove the tariff disparity. It has also sought higher export incentives, interest subsidies, and quicker GST refunds to support cash flow.
Industry impact beyond Gujarat
The tariff shock is not limited to Gujarat. Rajasthan's gems and jewellery trade, concentrated in Jaipur, is also bracing for losses, as earlier reported by Business Standard. The state exported ₹17,675 crore worth of gems and jewellery in FY25, of which about ₹3,154 crore went to the US. Jaipur is known globally for its coloured gemstones and diamond-studded jewellery.
Exporters in the state say US orders have been put on hold and are now exploring untapped markets to offset the drop in American demand. While new markets could help, industry players acknowledge that such diversification will take time and cannot absorb the current losses in the near term.
Surat's outlook cautious
For now, the full effect of the US tariff hike has not been felt in Surat, the country's largest diamond hub, employing over 800,000 workers. However, traders warn that if US buyers do not resume orders, even larger centres could eventually face job cuts.