U.S. imports of polished diamonds from India encounter new obstacles due to tariffs, according to Crisil representatives.
The Indian gems and jewellery sector is bracing for severe negative impacts following the announcement of a 25% tariff by the US, effective August 2025. This tariff could raise total duties on some items to over 30%, causing a major increase in costs for exporters.
The U.S. is the largest market for Indian gems and jewellery, accounting for about one-third of India’s $28.5 billion annual exports. This tariff threatens a sharp decline in orders, potential production cuts, and job losses across the value chain, from workers to manufacturers.
Key impacts include cost inflation and pricing difficulties, order decline and market share loss, revenue loss, and value chain pressure. The cumulative tariffs on gold and gemstones could reach 31–33%, significantly raising export costs and making Indian products less competitive. With cheaper competitors available, U.S. buyers may shift to other countries, exacerbating an already weak demand environment that had seen cut and polished diamond shipments fall to a 20-year low in 2024/25.
The broader 25% tariff could reduce Indian exports to the US by 10–20%, potentially costing $8–17 billion for industries including gems and jewellery. Every stage from cutting, polishing, and manufacturing to retail is expected to experience strain due to rising costs and market uncertainty.
Industry responses and calls to action include urgent government engagement, industry appeals, and risk management efforts. The Gem & Jewellery Export Promotion Council (GJEPC) and industry leaders are urging the Indian government to negotiate with the U.S. administration to reconsider or reduce the tariff and to pursue a favourable trade deal quickly to stabilise exports before key periods like the U.S. holiday season. The sector calls for constructive bilateral dialogue to protect jobs and the ecosystem reliant on U.S. trade. Exporters may attempt cost adjustments but face limited options due to tariff scale; some may explore shifting supply chains or markets, but given the U.S. is the top export destination, alternatives are constrained.
The Indian gems and jewellery sector has expressed deep concern over the US announcement of a 25% tariff on Indian exports. The long-term impact of the US tariffs may hurt the US more than India, according to business leaders. The US is the largest importer of Indian natural polished diamonds, accounting for 35% of total exports in fiscal 2025. Stakeholders in the sector have warned of potential job losses and rising prices for American consumers due to the tariffs.
India has expanding trade ties, including recent Free Trade Agreements (FTAs) with the UK, Australia, and the UAE, which are seen as a buffer against the fallout of the US tariffs. The Textile Ministry will meet industry players next week to discuss the impact of the US tariffs. Despite pushing sales in the fourth quarter to avoid tariffs, the revenues from natural diamond exports fell 17% to $13.3 billion in fiscal 2025.
The demand for natural diamonds in the US market has slowed down, according to Crisil Ratings officials. Miners and retailers may need to absorb some of the price shocks caused by the tariffs due to the limited ability of polishers to absorb the tariff-induced price rise. The share of the US in polished diamond exports decreased to 24% in the first quarter of the current fiscal year from 37% for the same period last fiscal year due to reduced offtake by retailers post the 10% tariff announcement.
The article was published on August 3, 2025. The US penalty on Russian oil could add $9-11 billion to India's import bill. Trump also mentioned additional penalties for India's oil purchases from Russia. Indian diamond polishers operate with thin margins of 4-5%. Despite these challenges, the sector continues to seek assistance and credit at affordable rates to navigate through these difficult times.
- The Indian gems and jewellery sector faces severe negative impacts due to a 25% tariff imposed by the US, effective August 2025, potentially raising total duties on some items to over 30%.
- The US is a significant market for Indian gems and jewellery, accounting for about one-third of India’s $28.5 billion annual exports.
- The tariff threatens a sharp decline in orders, potential production cuts, and job losses across the value chain, from workers to manufacturers.
- The broader 25% tariff could reduce Indian exports to the US by 10–20%, potentially costing $8–17 billion for industries including gems and jewellery.
- Industry responders call for urgent government engagement, industry appeals, and risk management efforts, urging the Indian government to negotiate with the US administration to reconsider or reduce the tariff.
- The demand for natural diamonds in the US market has slowed down, and stakeholders warn of potential job losses and rising prices for American consumers due to the tariffs, while the sector seeks assistance and credit to navigate through these difficult times.
