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Indian Express
2 days ago
- Business
- Indian Express
Trump tariffs: Why gem & jewellery sector fears rivals could undercut Indian exports
Facing a sharp blow from the US' steep tariff hike, India's gem and jewellery export industry has sought government intervention to cushion the impact and sustain its competitiveness in global markets. The sector finds itself at a crossroads, as rivals like Turkey, Vietnam and Thailand continue to enjoy significantly lower tariffs, making Indian products less attractive in the lucrative American market. The US accounts for nearly 30 per cent — or close to $10 billion — of the total gem and jewellery exports. Kirit Bhansali, chairman of the Gem & Jewellery Export Promotion Council (GJEPC), warned that unless corrective action is taken, India risks losing its hard-won position as a key supplier to the US. The threat isn't just financial — it's strategic. Bhansali expressed concern that international trade may start rerouting via low-tariff countries like Mexico, Canada, UAE, Oman and Turkey, undermining transparency and sidelining legitimate Indian players. This is particularly alarming since 85 per cent of exports from the SEEPZ Special Economic Zone — that employs over 50,000 people — are to the US. For cut and polished diamonds, the US remains the market for nearly half of India's total exports. A prolonged tariff standoff, Bhansali warned, could bring the industry to a grinding halt. The industry has asked the government to roll out a targeted scheme — similar to the Duty Drawback — that would reimburse 25–50 per cent of the new US-bound tariff burden between August and December 2025. GJEPC believes this is vital to prevent disruption across the value chain, stretching from artisanal karigars to large-scale manufacturers. In addition to tariff relief, exporters are calling for temporary financial breathing space. They've requested a six-month deferment on interest payments, a measure that echoes the pandemic-era support extended by lending institutions. With cancelled orders threatening to lock up working capital and push units towards non-performing asset (NPA) status, the Council has urged the government to allow SEZ units to release unsold stock into the domestic market. The sector is also grappling with shipment delays triggered by global uncertainty. To address this, banks are being asked to extend pre-shipment loan due dates by 90 days without penalties. The GJEPC has also called for the reintroduction of the interest subvention scheme, which could offer much-needed liquidity during a period of heightened risk. It has asked both the Centre and the RBI to consider short-term relief packages tailored to the sector's needs. Ironically, while the threat looms large, recent data points to a short-term spike in trade. Gross exports of gems and jewellery rose by nearly 16 per cent in July 2025, reaching $2.18 billion (Rs 18,756 crore), up from $1.88 billion (Rs 15,700 crore) a year ago. Imports too surged 26.5 per cent, as traders rushed to complete orders before the tariff hike took effect in August. A similar surge was seen in cut and polished diamond exports, which jumped nearly 18 per cent to $1.07 billion (Rs 9,230 crore), largely due to pre-emptive stocking by global buyers. This uptick, however, may be short-lived. Colin Shah, MD of Kama Jewelry, termed July's performance as a 'cautionary uptick' — a final flourish before the sector feels the full weight of tariff-induced drag. While new trade agreements like the India-UAE CEPA have unlocked opportunities, the broader landscape remains volatile. High gold prices, geopolitical uncertainty, and unstable metal markets continue to cloud the outlook, he said. The festive and wedding seasons in India may help absorb some of the shock by boosting domestic demand. But for the export-reliant segment, all eyes are now on the trajectory of India-US trade negotiations. With the current 50 per cent tariffs in place, sustaining recent growth could prove difficult, and industry leaders are hoping that policymakers will step in before the sparkle fades.
India Today
5 days ago
- Business
- India Today
How India's US-dependent diamond industry shrivels under Trump tariffs
With the United States being India's single-largest market for gems and jewellery, accounting for over 30 per cent of exports, the recent decision by US president Donald Trump to hike tariffs to a punishing 50 per cent threatens to cripple the industry, which is already reeling under Ukraine-Russia war-driven sanctions and cheaper lab-grown diamonds flooding the market. The recent tariff hike is a combination of a reciprocal tariff imposed by the United States in early August and an additional 25 per cent tariff, effective August 27, levied in response to India's continued imports of discounted Russian oil amidst the war in Ukraine. This escalation from a 10 per cent baseline tariff in April to the current 50 per cent has sent shockwaves through the industry, leaving many exporters facing an existential leaders, such as Kirit Bhansali, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), warn that a 50 per cent tariff is simply unsustainable and will make Indian diamond products uncompetitive in the US market. This is especially concerning as competitors like Turkey, Vietnam and Thailand benefit from significantly lower tariffs of 15 per cent, 20 per cent and 19 per cent, respectively.'This move would have far-reaching repercussions across India's economy—disrupting critical supply chains, stalling exports and threatening thousands of livelihoods,' says Bhansali. For India, the United States accounts for over $10 billion (around Rs 87,500 crore) in gems and jewellery exports, nearly 30 per cent of the industry's total global trade. 'There is significant dependency on the US market, as 85 per cent of exports from the SEEPZ Special Economic Zone, which provides 50,000 jobs, is directed there. For cut and polished diamonds, half of India's exports are US-bound. With revised tariff hike, the entire industry may come to a standstill, placing immense pressure on every part of the value chain—from small-time workers to large manufacturers,' adds Bhansali. Owing to the war, slowdown in Chinese and Hong Kong markets, and the influx of lab-grown diamonds, the cost of natural diamonds has slumped by around 30 per cent in the past two years as there is a glut of the precious stones in the international market. Diamond exporters and polishers have reduced the production of polished diamonds to recover prices. The United States accounts for approximately 25 per cent of India's total revenue from diamond polishing. With a 50 per cent tariff, the already tight margins in the loose diamond trade would be effectively eliminated. Small and medium-sized diamond polishing units in Gujarat's Surat and towns of Saurashtra, which handle a significant portion of the cutting and polishing for larger companies, have been severely impacted. Meanwhile, the lab grown diamond sector, initially seen as a potential avenue for employment for displaced workers, is also facing uncertainty. The United States is a significant market for lab-grown diamonds, and the imposition of a 50 per cent tariff could severely impact this growing segment as well. This raises concerns about the long-term employment outlook for the industry as a whole. The diamond polishing industry employs at least 800,000 artisans in Surat, Ahmedabad and towns of Indian diamond exporters are scrambling for alternatives. Tapping into the domestic Indian consumer market has emerged as a top priority, with resources poured into marketing and creating awareness about natural diamonds as against the lab-grown variety. Boosting trade to other countries is also being explored with focus. For instance, GJEPC targets increasing exports to the UAE by 20 per cent. Some are considering rerouting products through countries with lower tariffs, such as the UAE (which has a 10 per cent tariff) or Mexico (25 per cent). However, this involves additional costs and logistical challenges. The UAE's established gold trade infrastructure and logistics could make it an attractive option, but concerns about shortage of skilled labour industry has urged the Indian government to prioritise bilateral trade negotiations with the United States to address the tariff disparity and has requested support through measures such as duty drawback schemes, interest subsidies and expedited Goods and Services Tax (GST) GJEPC has proposed a targeted reimbursement mechanism to partially offset the tariff impact for US-bound exports until December 2025. 'Lending institutions may be permitted to allow a deferment of interest of six months, from August 1, 2025 to January 1, 2026, as was done during the COVID-19 period,' the GJEPC has requested the government. advertisementWith the Christmas season approaching, the uncertainty surrounding US tariffs casts a long shadow over India's diamond sector. The urgent need for a resolution to mitigate the economic impact and protect the livelihoods of hundreds of thousands of workers in this vital industry cannot be to India Today Magazine- EndsTune InMust Watch
Indian Express
11-08-2025
- Business
- Indian Express
Gems & jewellery exporters raise fears of job loss due to US tariffs
India's gems and jewellery exporters, citing high dependency on the US market, have expressed fears of job losses as steep 50 per cent tariffs would make Indian exports uncompetitive, the Gem and Jewellery Export Promotion Council (GJEPC) said in a statement on Monday. The exporters said that the US tariffs would have far-reaching repercussions across the economy—'disrupting critical supply chains, stalling exports, and threatening thousands of jobs'—as the US is the sector's single largest market, accounting for over $10 billion in exports, nearly 30 per cent of the industry's total global trade. 'A blanket tariff of this magnitude is severely devastating for the sector. There is significant dependency on the US market, as 85 per cent of exports from SEEPZ Special Economic Zone (SEZ), which provides 50,000 jobs, are directed there,' the GJEPC said in a statement. This assumes significance as the sector has witnessed only marginal growth over the years. Exports across all the previous five years remained within the range of $35 billion to $40 billion, except for FY2020–2021 when exports plunged to $26.61 billion due to the COVID-19 pandemic. According to a National Council of Applied Economic Research (NCAER) survey, in 2019 there were a total of 9.89 lakh units and 42.89 lakh workers in the gems and jewellery sector in India. The sector, with total exports of around $38.11 billion, accounted for 8.45 per cent of India's merchandise exports in 2022–23 and is among the top five leading foreign exchange earners for the country, the GJEPC said. 'In FY2022–2023, exports of gems and jewellery decreased by (-) 2.94 per cent to $38.11 billion from $39.26 billion in FY2021–22,' the GJEPC said. Exporters said that competing manufacturing hubs such as Turkey, Vietnam and Thailand continue to enjoy significantly lower tariffs of 15 per cent, 20 per cent and 19 per cent respectively, making Indian products relatively less competitive in the US market. 'This imbalance, if unaddressed, could erode India's long-standing position as a key supplier to the US,' exporters said. 'We are also concerned about the possibility of trade rerouting through low-tariff destinations such as Mexico, Canada, Turkey, UAE, or Oman—undermining the spirit of legitimate trade and impacting transparency,' the GJEPC said. The exporters asked the government to introduce a targeted scheme on the lines of Duty Drawback or a reimbursement scheme, covering approximately 25–50 per cent of the new tariffs imposed on gems and jewellery exports to the US from August to December 2025. 'This initiative aims to partially offset the impact of the new tariff structure, mitigate financial strain on exporters, reduce the risk of order cancellations, and help maintain India's market share in an increasingly competitive and price-sensitive global market,' the exporters said. With respect to working capital facilities sanctioned, lending institutions may be permitted to allow a deferment of interest for six months, from August 1, 2025 to January 1, 2026, as was done during the COVID-19 period, the GJEPC said. By allowing reverse job work to SEZs, the SEZ units would be able to utilise their machinery and engage their labour for the manufacture and supply of jewellery in the domestic tariff area (DTA), which could be a lifeline during this crisis. The duty should be on the value of duty foregone on the duty-free inputs used by the SEZ unit in manufacturing jewellery for the DTA,' the exporters said. Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, covering policy issues related to trade, commerce, and banking. He has over five years of experience and has previously worked with Mint, CNBC-TV18, and other news outlets. ... Read More
