India’s Diamond and Jewellery Industry Faces Threat from Potential US Tariff Hike
India’s diamond and jewellery sector is facing a serious challenge as the US considers increasing tariffs on imports from India. This move could further strain an already struggling industry that plays a crucial role in the Indian economy.
The Growing Tariff Disparity
Under the Trump administration, the US sought to address trade imbalances by adjusting tariffs. Currently, India imposes tariffs of around 12% on US imports, while the US imposes significantly lower duties—just 2.2% on imports from India. According to World Trade Organization data, there are rising concerns that the US may increase tariffs on Indian imports to match India’s 12% rate, possibly as soon as April 2.
Impact on India’s Gem and Jewellery Exports
The gem and jewellery export sector in India generated over $11.58 billion in exports last year, accounting for over 30% of the nation’s total exports in this field, as per the International Trade Commission. A tariff hike by the US would put immense pressure on the industry, potentially affecting the livelihoods of millions.
Currently, India levies a 5% duty on imported polished diamonds and 20% on gold, silver, and platinum jewellery. On the other hand, the US imposes no duties on loose diamonds from India, while gold jewellery is taxed between 5.5% to 7%. An increase in US tariffs could create a chain reaction, leading to job losses, business closures, and further pressure from already weak global demand and intense competition from lab-grown diamonds.
Urgent Calls for Government Intervention
Industry leaders are urging the Indian government to step in and protect the sector. Adil Kotwal, President of the SEEPZ Gems & Jewellery Manufacturers’ Association (SGJMA), has expressed concerns that such a tariff hike could threaten thousands of jobs, calling for negotiations to ensure a fairer duty structure between the two countries.
Kirit Bhansali, Chairman of the Gem and Jewellery Export Promotion Council (GJEPC), also stressed the significant impact on Indian exports of studded gold jewellery, as well as cut and polished diamonds. The GJEPC has been actively engaging with US trade counterparts to prevent the tariff increase, emphasizing that many American retailers and jobs depend on the continued import of Indian jewellery.
Conclusion: The Road Ahead
With the possibility of new tariffs on the horizon, India’s diamond and jewellery sector is on high alert. The industry hopes for diplomatic intervention to prevent further disruption to a vital export sector that supports millions of jobs. As the global trade landscape continues to evolve, the sector remains hopeful that a balanced solution can be found to sustain growth and protect jobs in both countries.
