Effects of U.S. Tariffs on the Jewelry Industry

In 2024-25, the U.S. is India's biggest diamond importer, with diamond exports valued at ₹46,000 crore and studded gold jewellery exports at ₹23,000 crore.

The diamond cutting and polishing sector provides jobs for 8.2 lakh skilled laborers.

Problems and Difficulties

India’s gemstone and jewelry export sector is encountering a significant hurdle due to high U.S. tariffs, making Indian goods less competitive against competitors such as Turkey, Vietnam, and Thailand.

India faces the danger of forfeiting its strategic status as a leading supplier, as trade may migrate to countries with lower tariffs like Mexico, Canada, UAE, Oman, and Turkey.

Industry specialists caution that persistent challenges such as elevated gold prices, geopolitical conflicts, and volatile metal markets contribute to the unpredictability.

Diverse Requests

The sector urgently requests government action, such as immediate policy measures like increasing export obligation durations from 90 to 270 days, enabling SEZs to sell domestically without import duties, and allowing reverse job work to maintain factory operations and employment for workers.

Moreover, financial incentives like interest subsidies, export grants, assistance for workers (loan modification, healthcare), and marketing aid for entering new markets are sought.

The Government has implemented multiple initiatives recently to encourage investment and enhance technology and skills to elevate ‘Brand India’ on the global stage.

The Government has allowed 100% FDI in the sector through the automatic route, meaning that neither the foreign investor nor the Indian company needs prior approval from the Reserve Bank or the Government of India.

In March 2022, the Indian Government entered into a Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE).

In the Union Budget for 2025-26, the customs duty on jewellery (HSN code 7113) was decreased from 25% to 20% and on platinum findings from 25% to 5%, enhancing jewellery affordability and increasing domestic demand.

Conclusion and Future Direction

The emergence of big-box stores and organized brands that provide more product variety and design options is expected to propel the growth of India's gem and jewelry industry.

Short- to medium-term volume growth is anticipated to be bolstered by the reintroduction of low-cost gold loans, the relaxation of import restrictions, the stabilization of gold prices, and enhanced gold availability.

The export industry's future is largely dependent on India-US trade negotiations and prompt government action to avoid long-term harm, even though domestic demand during the holiday and wedding seasons may provide some respite.