One more blow! US reciprocal tariffs likely to have an adverse impact on Indian gems and jewellery sector
By Paresh Parekh
US tariffs of around 27% wef April 2025 on Indian gems and jewellery has sent shock waves through the industry. This proposal is likely to significantly impacts India’s exports to its largest market. Previously, the US levied no tariffs on cut and polished diamonds from India, while India imposed a 5% tariff on similar imports. The new tariff regime is expected to affect approximately $11 billion + worth of Indian exports to the US by Indian sector.
Source: GJEPC Research Division based on DGCIS- FY2024 and USITC data 2024
India’s gems and jewellery sector is highly dependent on exports, with the US being a major market. In FY 2023-2024, India’s total exports of gems and jewellery stood at $32.85 billion, with $9.95 billion directed to the US, accounting for 30.29% of the sector’s exports. The US, in turn, imported $89.12 billion worth of gems and jewellery globally in CY 2024, with India contributing 12.99% of this total. This heavy reliance on the US market means that changes in tariff policies will have profound effects on the sector’s performance.
Country-wise share of India’s gems and jewellery exports in 2024-25
The gems and jewellery sector in India has already been facing several challenges over the past few years. Changing consumer preferences, the rise of lab-grown diamonds, demonetization, soaring gold prices, and increased competition from other countries have all contributed to a decline in the sector. The imposition of US tariffs adds another layer of complexity, potentially leading to job losses and margin erosions. The sector’s exports have already seen a decline, with a 14.5% drop to $32.3 billion in the 2023-24 fiscal year with further drop to $8.6 billion in 2024-25. The industry is now bracing for a further fall in exports due to the new tariffs.
India’s gems and jewellery exports
The Indian gems and jewellery sector has been struggling with multiple issues even before the imposition of US tariffs. The sector has been hit by weak demand from key markets like China, operational challenges, and high import duties on gold jewellery.
These factors have compounded the difficulties faced by the sector, making it imperative for the Sector to expect that Indian government should negotiate favourable terms in trade deals with the US to mitigate the adverse impacts.
Thus, in summary, the imposition of US tariffs on Indian gems and jewellery is a significant blow to an already struggling sector. With the US being a major market, the new tariffs threaten to further erode margins and lead to risk of job losses. It is crucial for 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.
(Paresh Parekh is National Retail & Consumer sector Leader, Tax, EY India. Terjani Samant, Senior Manager, Tax, EY India also contributed to the article. The opinion expressed here are personal views of the writers and do not in any manner represent views of organization they work for)
