New Delhi: India’s $32 billion gems and jewellery industry, one of the country’s key export sectors, is facing a significant challenge due to increased US tariffs. The United States, being one of the largest importers of Indian cut and polished diamonds, gold, and silver jewellery, plays a crucial role in sustaining India’s export market. However, the recent tariff hikes by the US government threaten to disrupt trade, potentially leading to reduced demand, lower profit margins, and job losses in the sector.
The US accounts for nearly 30-35% of India’s total gems and jewellery exports, making it the largest consumer of Indian jewellery. With higher import duties, American retailers may either cut back on Indian imports or shift to alternative suppliers such as China, Thailand, or local US manufacturers. This could result in a 15-20% decline in jewellery exports from India, significantly affecting the industry’s revenue.
Moreover, Indian jewellery exporters often operate on thin profit margins, relying on high volume sales to sustain their businesses. With the increased tariffs, companies may have to absorb the additional costs, making their products less competitive in the global market. This could force many manufacturers, especially small and medium enterprises (SMEs), to scale down operations or shut down entirely.
Another major concern is job losses in the sector. India’s jewellery and diamond-cutting industry employs over 5 million workers, many of whom are skilled artisans in cities like Surat, Mumbai, and Jaipur. A decline in exports could lead to mass layoffs, wage cuts, and a slowdown in hiring, affecting thousands of families dependent on the industry.
In response, industry leaders and trade associations are urging the Indian government to negotiate with the US for either lower tariffs or exemptions on jewellery exports. Additionally, exporters are looking to diversify their markets by strengthening trade ties with regions like the UAE, China, and Europe, while also expanding domestic sales to offset losses from the US market.
If the tariff issue remains unresolved, India’s jewellery sector may face long-term setbacks, potentially losing its dominant position in global markets. Therefore, a strategic policy intervention is crucial to protect one of India’s most valuable export industries.
Also Read: Trump’s Trade War: How India and the World Brace for Economic Shockwaves
India’s Jewellery Industry: An Overview
The gems and jewellery industry is one of the most vital sectors of India’s economy, playing a crucial role in exports, employment, and foreign exchange earnings. Known for its rich craftsmanship, innovative designs, and expertise in diamond cutting and gold jewellery production, India is a global leader in the sector.
Key Contributions of the Industry:
✔️ 7% Contribution to GDP: The jewellery industry significantly boosts India’s Gross Domestic Product (GDP), making it a major economic driver.
✔️ 12-15% of Total Exports: The industry is a key player in India’s export market, providing a steady flow of foreign exchange.
✔️ Employment for Over 5 Million Workers: The sector is one of the largest employers in India, with millions of artisans, designers, traders, and craftsmen dependent on it.
Types of Jewellery Exports from India:
India is known for exporting a wide range of jewellery products, including:
🔹 Cut and Polished Diamonds: India processes 90% of the world’s diamonds, with Surat being the global hub.
🔹 Gold Jewellery: India is a leading exporter of 22K and 24K gold jewellery, particularly to the Middle East.
🔹 Silver Jewellery: India has seen a growing demand for silver jewellery in global markets, including the US and Europe.
🔹 Gemstones and Studded Jewellery: The country is a top supplier of precious and semi-precious gemstones such as emeralds, rubies, and sapphires.
Major Jewellery Export Destinations
India’s jewellery industry relies heavily on international markets, with a few key countries driving the majority of exports.
🔹 United States (US):
✔️ Largest importer of Indian jewellery, accounting for nearly 30-35% of total exports.
✔️ High demand for diamond-studded jewellery, bridal collections, and gold jewellery.
✔️ US retailers and brands source from India due to competitive pricing and superior craftsmanship.
🔹 United Arab Emirates (UAE):
✔️ A major re-export hub, with many Indian jewellery pieces being sold in the UAE and then exported globally.
✔️ Strong demand for gold jewellery and luxury designer pieces.
✔️ Dubai’s free trade policies make it a strategic gateway for Indian exporters.
🔹 Europe (UK, France, Germany, Italy):
✔️ High-end luxury jewellery sees steady demand, particularly Italian and French markets.
✔️ Indian exporters focus on certified diamonds, handcrafted pieces, and customized jewellery.
✔️ Germany and the UK are key consumers of silver jewellery and fashion accessories.
🔹 Hong Kong & China:
✔️ Key importers of Indian diamonds, with Hong Kong serving as a re-export hub to mainland China.
✔️ China’s growing middle class has increased demand for gold and gemstone jewellery.
✔️ India competes with Chinese domestic jewellery brands, making trade policies crucial.
Impact of US Tariffs on Indian Jewellery Exports
With the United States imposing higher tariffs on Indian jewellery, the industry is expected to experience a sharp decline in exports. This will have far-reaching consequences for:
❌ Small and Medium Enterprises (SMEs): Many small jewellers rely on exports to the US and may struggle to find alternative markets.
❌ Job Creation: The industry is labor-intensive, and lower export orders may lead to layoffs and reduced hiring.
❌ Foreign Exchange Earnings: Jewellery exports contribute significantly to India’s forex reserves, and a drop in demand could affect India’s trade balance.
🔻 Projected Decline: Analysts estimate a 15-20% fall in jewellery exports to the US in 2025, unless alternative markets are developed.
To mitigate the impact, Indian jewellers are focusing on diversifying exports to other countries and urging the government to negotiate trade relief with the US. If successful, this could help stabilize India’s jewellery industry and sustain growth despite the tariff challenge.
Impact of US Tariffs on Indian Jewellery Exports: A Detailed Analysis
The Indian gems and jewellery industry, valued at $32 billion, is one of the largest contributors to the country’s export revenue and employment. It accounts for 12-15% of total exports and provides jobs to over 5 million workers, particularly in cities like Surat, Mumbai, and Jaipur. However, the imposition of higher US tariffs on jewellery imports is expected to create major challenges for the sector.
The United States is the largest importer of Indian jewellery, accounting for 30-35% of India’s total jewellery exports. With increased tariffs, the cost of Indian jewellery will rise, making it less competitive compared to jewellery from countries like China, Thailand, and the UAE. This could lead to reduced demand, lower profit margins, declining foreign exchange earnings, and potential job losses.
1. Reduced Demand in the US Market
The United States has traditionally been India’s biggest jewellery export market, especially for cut and polished diamonds, gold, and silver jewellery. However, with the imposition of higher import duties, US importers and retailers will be forced to reconsider their sourcing strategies, leading to a decline in demand for Indian jewellery.
How Increased US Tariffs Will Impact Demand:
✔️ Higher Costs for US Buyers: The increased tariff will raise the final price of Indian jewellery in the US market. Retailers may find it difficult to maintain competitive pricing while absorbing additional costs. This could lead many importers and wholesalers to reduce their jewellery orders from India.
✔️ Shift to Alternative Suppliers: With tariffs making Indian jewellery more expensive, US retailers may turn to alternative suppliers from countries like China, Thailand, Vietnam, and domestic US manufacturers. This shift in sourcing could significantly reduce India’s market share.
✔️ Increase in Domestic Manufacturing in the US: Higher tariffs could encourage US-based jewellery manufacturers to expand production, reducing their reliance on imported jewellery from India.
✔️ Declining Consumer Demand in the US: If US retailers continue sourcing from India despite the tariffs, they may pass on the increased costs to American consumers. This could lead to reduced demand, especially for high-value jewellery pieces.
📉 Estimated Export Decline: Analysts predict that Indian jewellery exports to the US may drop by 15-20% in 2025. Given that the US is India’s biggest market, this decline could severely impact overall export revenues.
2. Shrinking Margins for Indian Jewellery Companies
The Indian jewellery industry operates on thin profit margins, especially in the diamond and gold jewellery segments. The new tariffs will further squeeze these margins, forcing businesses to adjust pricing strategies or risk losing market share.
Challenges for Jewellery Exporters Due to Shrinking Margins:
❌ Higher Costs Cannot Always Be Passed on to Buyers: Many exporters have long-term contracts with US retailers and may not be able to increase prices immediately. This means they will have to absorb the additional tariff costs, leading to lower profitability.
❌ Indian Jewellery Becomes Less Competitive Globally: With US buyers exploring other suppliers, Indian jewellery companies could lose their competitive edge in global trade.
❌ Reduction in New Orders: As US retailers try to cut costs and diversify suppliers, Indian jewellery manufacturers may see a decline in new orders, affecting business growth.
💰 Revenue Impact: Experts predict that India’s overall jewellery export earnings could fall by $4-5 billion due to the combined impact of tariffs and falling demand.
3. Potential Job Losses in the Indian Jewellery Sector
The Indian jewellery industry employs over 5 million workers, many of whom are skilled artisans, goldsmiths, diamond cutters, and designers. A decline in exports due to higher US tariffs could directly impact employment, especially in manufacturing hubs like Surat, Mumbai, Jaipur, and Kolkata.
How the Tariff Hike Could Lead to Job Losses:
❌ Reduced Production Output: Lower exports mean manufacturers will scale down operations, leading to fewer job opportunities.
❌ Job Cuts in Diamond and Gold Processing Units: With declining US orders, diamond-cutting and jewellery manufacturing units in Surat and Mumbai could lay off workers.
❌ Lower Wages and Working Hours: Some companies may cut salaries or reduce working hours to balance declining revenues.
📉 Employment Impact: Industry analysts estimate that 10-15% of jobs in the export-driven jewellery sector could be lost if demand continues to fall.
4. Foreign Exchange Earnings at Risk
Jewellery exports play a crucial role in India’s foreign exchange earnings. A decline in US orders could:
🔻 Lower India’s overall export revenue
🔻 Increase trade deficit due to reduced foreign exchange inflows
🔻 Create currency fluctuations, impacting global trade stability
Given that India exports billions of dollars worth of jewellery annually, any sharp decline in exports could impact the country’s overall economic stability.
5. Industry Reactions and Possible Solutions
✔️ Government Intervention: The Gems and Jewellery Export Promotion Council (GJEPC) and industry leaders are urging the Indian government to negotiate with the US for tariff relief.
✔️ Diversification of Export Markets: Indian jewellery companies are exploring alternative markets such as UAE, Europe, Hong Kong, and Southeast Asia to reduce reliance on the US.
✔️ Boosting Domestic Demand: Some exporters are shifting their focus to India’s growing luxury jewellery market, which is driven by weddings, festivals, and rising disposable income.
✔️ Enhancing Cost Efficiency: Jewellery manufacturers may adopt new technologies, automation, and cost-cutting strategies to remain competitive.
How India Can Overcome the US Tariff Challenge in Jewellery Exports
With the imposition of higher US tariffs on Indian jewellery, the $32 billion Indian gems and jewellery industry is facing a significant setback. However, despite these challenges, India has several strategic options to mitigate the impact and sustain the growth of the industry. By focusing on government-led trade negotiations, diversifying export markets, and strengthening the domestic jewellery industry, India can counter the adverse effects of US tariffs and maintain its global market presence.
1. Government-Led Trade Negotiations: Seeking Tariff Relief
Key Steps India Can Take in Trade Negotiations:
✅ Lobby for Lower Tariffs or Exemptions in US Trade Agreements:
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The Indian government and industry bodies such as the Gems and Jewellery Export Promotion Council (GJEPC) can work towards bilateral trade discussions with the US to reduce tariffs or obtain exemptions for certain jewellery categories.
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India has previously negotiated tariff relaxations in pharmaceuticals and textiles and could use similar strategies for jewellery exports.
✅ Negotiate a Preferential Trade Agreement (PTA) with the US:
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The Indian government could push for a PTA or Free Trade Agreement (FTA) with the US, which could lower or eliminate tariffs on jewellery exports.
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Such trade pacts have helped other countries like Mexico and Canada secure favorable trade terms with the US.
✅ Strengthening Trade Ties with Alternative Markets:
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While the US remains a major market, India can expand trade partnerships with high-demand regions such as the Middle East, Europe, and Southeast Asia to reduce dependence on US buyers.
💬 Industry Insight:
Trade experts suggest that India must engage with US policymakers and industry leaders to highlight the mutual benefits of jewellery trade and seek policy adjustments that could ease the tariff burden.
2. Diversifying Export Markets: Reducing Dependence on the US
Since US demand for Indian jewellery is likely to decline, Indian exporters must explore and expand into alternative global markets that offer strong demand for jewellery and diamonds.
Key Alternative Export Markets for Indian Jewellery:
✔️ Middle East (UAE, Saudi Arabia, Qatar, Bahrain)
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Dubai and Abu Dhabi serve as major jewellery re-export hubs.
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High demand for gold jewellery, diamond-studded ornaments, and wedding jewellery.
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UAE is India’s second-largest jewellery export market after the US.
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The India-UAE Comprehensive Economic Partnership Agreement (CEPA) already provides tariff benefits, making UAE a lucrative alternative.
✔️ China & Hong Kong
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Growing market for luxury diamond jewellery and designer ornaments.
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Hong Kong has historically been a major diamond trading hub.
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With China’s rising middle-class spending on high-end jewellery, Indian exporters can expand into this high-growth market.
✔️ Europe (UK, France, Germany, Italy) & Australia
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Growing demand for designer jewellery, branded gold, and platinum jewellery.
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Luxury jewellery brands are expanding in London, Paris, and Milan, offering opportunities for Indian exporters.
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European buyers prioritize craftsmanship and certified diamonds, where India has a competitive advantage.
✔️ Southeast Asia (Singapore, Malaysia, Thailand, Vietnam)
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Strong market for affordable gold and silver jewellery.
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E-commerce growth in Asia provides direct-to-consumer (D2C) sales opportunities for Indian jewellers.
💬 Market Trend:
The Middle East and Southeast Asia are emerging as fast-growing jewellery markets, and Indian exporters must strengthen their presence in these regions to offset the decline in US demand.
3. Enhancing Domestic Market Growth: Boosting India’s Jewellery Sales
With export revenues under pressure, Indian jewellers can turn their focus to the booming domestic market, which is driven by weddings, festivals, and luxury spending.
How Indian Jewellers Can Strengthen Domestic Sales:
✔️ Focusing on Luxury Jewellery for High-Net-Worth Individuals (HNIs):
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India’s wealthy class is expanding, leading to higher demand for high-end diamond and platinum jewellery.
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Targeting elite buyers, celebrities, and business tycoons could help jewellers sustain revenue growth.
✔️ Investing in E-Commerce and Digital Expansion:
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With global e-commerce booming, Indian jewellery brands must expand their online presence through:
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D2C (Direct-to-Consumer) websites
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Marketplaces like Amazon, Flipkart, and Tata Cliq Luxury
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Social media-driven sales on Instagram and Facebook
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Augmented Reality (AR) technology can help customers virtually try on jewellery, boosting online sales.
✔️ Developing New Product Lines and Designs:
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Indian jewellers can innovate with contemporary, minimalist, and fusion designs to attract younger consumers.
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Sustainable and lab-grown diamond jewellery is gaining popularity among millennials and Gen Z buyers.
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Customization and personalization trends are also growing, encouraging jewellers to offer bespoke services.
✔️ Expanding into Tier 2 & Tier 3 Indian Cities:
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While metros like Mumbai, Delhi, and Bengaluru have strong jewellery demand, the next growth wave is coming from smaller cities.
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Affordable gold and silver jewellery brands can expand into cities like Lucknow, Indore, Jaipur, Coimbatore, and Bhubaneswar.
💬 Retail Insight:
Many leading jewellery brands like Tanishq, PC Jeweller, and Kalyan Jewellers are already expanding into India’s semi-urban markets, tapping into rising consumer aspirations and disposable income.
4. Strengthening Cost Efficiency and Innovation
With profit margins shrinking due to tariffs, Indian jewellers must adopt strategies to improve cost efficiency and reduce overhead expenses.
✔️ Using Advanced Manufacturing Techniques:
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Investing in automation and technology-driven production to cut costs.
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3D printing and AI-based jewellery designing can enhance precision and reduce wastage.
✔️ Exploring Lab-Grown Diamonds:
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Lab-grown diamonds are gaining traction in international markets, offering cost-effective alternatives to natural diamonds.
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Many global retailers are shifting towards sustainable jewellery, making lab-grown diamonds an attractive option for export.
✔️ Sourcing Raw Materials More Efficiently:
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Securing bulk sourcing deals for gold and diamonds can help lower production costs.
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Strengthening local supply chains to reduce dependence on imported raw materials.
Conclusion: A Critical Time for India’s Jewellery Industry
The US tariff increase poses a serious threat to India’s $32 billion gems and jewellery industry. A decline in exports could have far-reaching economic consequences, affecting:
📉 Revenue for Indian jewellery firms – Companies may face shrinking profit margins and increased competition from other jewellery-exporting nations.
📉 Employment for skilled artisans – Millions of workers, particularly in Surat, Mumbai, and Jaipur, could face job losses or wage cuts.
📉 Foreign exchange earnings – The jewellery sector is a major contributor to India’s export revenue, and reduced demand from the US could widen the country’s trade deficit.
The Road Ahead: A Multi-Pronged Strategy is Crucial
To mitigate the impact of rising tariffs, India’s jewellery industry must act swiftly by adopting:
✅ Government Intervention & Trade Negotiations – Seeking exemptions, lower tariffs, or preferential trade agreements with the US.
✅ Market Diversification – Expanding exports to the Middle East, China, Europe, and Southeast Asia to reduce dependence on the US.
✅ Strengthening Domestic Demand – Boosting e-commerce, luxury jewellery sales, and expansion into Tier 2 and Tier 3 cities.
✅ Innovation & Cost Efficiency – Investing in automation, lab-grown diamonds, and AI-driven jewellery design to stay competitive.
While the short-term outlook remains challenging, proactive strategies will help Indian jewellers adapt to changing global trade conditions and maintain their leadership in the global market.
For real-time updates on India’s jewellery exports, visit the NSE website: www.nseindia.com
