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Informist, Thursday, Apr. 3, 2025

 

By Sandeep Sinha

 

MUMBAI – The reciprocal tariffs announced by US President Donald Trump early Thursday are likely to weigh heavily on India's gems and jewellery sector, especially diamond exports from the country, according to industry and sector experts. The US is the largest market for diamond, gold and other precious jewellery exported from India, accounting for almost 30% share.

 

The Trump administration's announcement of a 27% reciprocal tariff on Indian gems and jewellery exports to the US would be a significant burden on Indian exporters and American consumers alike, Gem and Jewellery Export Promotion Council said in a note. "The tariff's application to competing nations presents both challenges and opportunities, it is likely to significantly impact India's diamond and jewellery sector – a cornerstone of its exports to the US," it said.

 

Prior to the US tariffs becoming effective, the gems and jewellery industry was already facing a significant slowdown and weak demand. The country's net gems and jewellery exports in Apr-Feb was down 12.6% from a year ago to $21.28 billion, while gross exports declined to $25.73 billion from $29.74 billion a year ago, the Council data showed.

 

"It's a big setback for India as the US has announced retaliatory tariffs. While in the broader sense, it will be 27%. The Gems and Jewelry sector will be the most affected as import tariffs may be up to 20% from the current 0% on loose diamonds and 5.5-7% on gold jewellery," Colin Shah, managing director, Kama Jewelry said in an email note. Indian jewellery exports to the US are over $11 billion per year, Shah said.

 

In the near-term, we anticipate challenges in sustaining India's current export volume of $10 billion to the US market. We urge the Government of India to progress the bilateral trade agreement between India and the US, as it would be crucial in navigating the tariff issues and securing long term interest of the sector, the Council said.

 

In 2023-24 (Apr-Mar), India exported gems and jewellery worth $32.85 billion globally, with the US accounting for $9.95 billion, or 30.28%. In calendar year 2024, India accounted for $11.58 billion, or 12.99% of America's total gem and jewellery imports worth $89.12 billion. So India's exposure to US is much higher; hence, the recent tariff imposition is negative for the sector and could lead to significant decline in volume, unless they are able to pass on this duty hike to the end consumer which looks difficult, said Gaurav Jogani, director- consumer discretionary, JM Financial Institutional Securities Ltd.

 

Jogani said exports are generally taken up by large business houses and, therefore, to that extent the direct dependence of small sizes players on exports to the US would be limited. Also, the local jewellery market is growing in high teens over the past couple of years, so we believe some of this lost production can be diverted to meet domestic demand.

 

In calendar year 2024, the US was biggest buyer of India's natural diamond valued at $4.88 billion, accounting for 35.6% share. Export of natural or cultured pearls, precious or semiprecious stones, and others to US were valued at $9.3 billion last year.

 

Kama Jewelry's Shah said the Indian government should work towards lowering tariffs on US goods exported to India. As the tariffs announced are retaliatory in nature, they will be matched with the existing rates. India currently imposes a 20% import duty on gold, silver, and platinum jewellery from the US.

 

The global gems and jewellery export market was valued at $923.48 billion in 2023 with India having a share of 3.6% and ranked sixth behind Switzerland, United Arab Emirates, Hong Kong and China, the UK, and the US. End

 

Edited by Deepshikha Bhardwaj 

 

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