US Tariffs on Indian Gems and Jewelry: A Major Setback
The Effect of US Tariffs on Indian Gems and Jewelry
The US has introduced tariffs of about 27% on Indian gems and jewelry, starting April 2025. This move is predicted to have a significant impact on India’s exports to its largest market. Earlier, the US had no tariffs on cut and polished diamonds from India, while India imposed a 5% tariff on similar imports. The new tariff system is expected to affect around $11 billion worth of Indian exports to the US by the industry.
Export Statistics
- India’s total gems and jewelry (G&J) exports in FY 2023-2024: $32.85 billion
- India’s G&J exports to the USA in FY 2023-2024: $9.95 billion
- Percentage share of the USA in India’s G&J exports: 30.29%
- USA imports of G&J from the world in CY 2024: $89.12 billion
- USA imports of G&J from India in CY 2024: $11.58 billion
- Percentage share of India in USA G&J imports: 12.99%
Source: GJEPC Research Division based on DGCIS- FY2024 and USITC data 2024
Challenges for the Indian Gems and Jewelry Industry
The Indian gems and jewelry industry heavily relies on exports, with the US being a major market. The introduction of US tariffs adds another challenge, potentially causing job losses and margin erosions. The industry’s exports have already decreased, with a 14.5% drop to $32.3 billion in the 2023-24 fiscal year, and further decline to $8.6 billion in 2024-25. The industry is now preparing for a further decrease in exports due to the new tariffs.
Tackling the Challenges
The Indian gems and jewelry industry has been dealing with multiple issues even before the introduction of US tariffs. The industry has been affected by weak demand from key markets like China, operational challenges, and high import duties on gold jewelry. These factors have worsened the difficulties faced by the sector, making it essential for the sector to expect that the Indian government should negotiate favorable terms in trade deals with the US to minimize the negative impacts.
In conclusion, the introduction of US tariffs on Indian gems and jewelry is a major setback for an already struggling sector. With the US being a major market, the new tariffs threaten to further erode margins and lead to job losses. It is crucial for the sector to engage with the Indian government and US Government to address these challenges through strategic negotiations, trade deals, etc and support measures to ensure the long-term sustainability of the sector.
