Surat diamond hub faces US tariff blow as exports and jobs hang in balance

Surat — the glittering heart of the global diamond trade — is staring at one of its darkest hours. A shock 50% tariff imposed by the United States on India’s polished diamonds from August 27 has sent the industry into panic, forcing exporters to freeze orders, halt production and brace for massive job losses.

The timing could not be worse. With Christmas — the biggest sales season for global jewellery — barely five months away, orders from the US, which accounts for nearly one-third of India’s annual gems and jewellery exports, have already slowed to a trickle. The US imported $5.79 billion worth of Indian non-industrial diamonds last year, making India its top supplier by far.

“This will be devastating. Exports were already down 25% in recent years, production is down by over 30%. Now, we expect an even steeper crash,” said Hitesh Patel, director of Dharmanandan diamonds, a Surat giant with a turnover of ₹7,000 crore.

Industry leaders warn the tariff could wipe out India’s competitive edge. While Israel faces only a 19% duty and rivals like Turkey, Vietnam and Thailand face 15-20%, Indian exporters are now saddled with the highest rate — pricing them out of their most lucrative market.

Kirit Bhansali, national chairman of the Gems & Jewellery Export Promotion Council (GJEPC), warned that the fallout could be catastrophic: “We estimate 1.25 lakh jobs will be lost in just four to five months — mainly in Gujarat, Maharashtra and Rajasthan. This will hit diamond cutting, gold and silver jewellery, and coloured gemstone sectors, with a cascading effect on the economy.”

For Surat, the stakes are enormous. The city processes eight out of every 10 polished diamonds in the world, employing over six lakh skilled polishers — many of them migrants from Saurashtra. The $24 billion sector is already reeling from weak global demand, falling diamond prices and reduced working hours.

Adding to the pain, major producers like De Beers have cut rough diamond output by over a third this year to stabilise prices, while natural diamond polishers are increasingly shifting to lab-grown diamonds (LGDs) — a cheaper, faster-growing segment now also seeing price declines.

Veteran exporter Sevanti Shah remains cautiously optimistic. “Americans will still buy diamonds for their loved ones — they may choose smaller stones, but they won’t stop buying altogether,” he said.

The GJEPC has urged the Commerce Ministry to step in with targeted tariff reimbursements to help exporters weather the storm. Yet many in Surat fear that without urgent government support — and possibly US buyers sharing the tariff burden — the city’s diamond sparkle could dim for years to come.