Gold bangles are displayed at a jewellery store.
Credit: Reuters Photo
Bengaluru: The imposition of a 50% tariff by the US on select Indian goods is set to disrupt critical supply chains, stall exports and threaten thousands of livelihoods. The Indian gem and jewellery sector, which generates $10 billion (about Rs 87,000 crore) worth exports or 30% of its global trade from the US will be severely impacted.
The entire industry could come to a standstill, with revised tariffs coming into effect, thereby placing immense pressure on every part of the value chain - from small karigars to large manufacturers. The jewellery industry has a significant dependency on the US market, as 85% of exports from SEEPZ SEZ, which provides 50,000 jobs, is directed to the US. For cut and polished diamonds, half of India's exports are US-bound, industry players said.
India's competitors like Turkey, Vietnam, and Thailand enjoy significantly lower tariffs of 15%, 20%, and 19% respectively, thereby making Indian products relatively less competitive in the US market. This imbalance, if unaddressed, could erode India's long-standing position as a key supplier to the US, according to Kirit Bhansali, Chairman, Gems & Jewellery Export Promotion Council (GJEPC).
"We are also concerned about the possibility of trade rerouting through low-tariff destinations such as Mexico, Canada, Turkey, UAE, or Oman—undermining the spirit of legitimate trade and impacting transparency," he said.
Despite these challenges, the Indian gems & jewellery industry remains resilient. The domestic market, currently pegged at $85 billion, is expected to grow to $130 billion in the next two years.
The industry has urged the government for policy reforms and extensive support to aid the industry in these extraordinarily challenging times. The GJEPC has asked the government to introduce a targeted scheme on the lines of Duty Drawback or reimbursement scheme, covering approximately 25-50% of the new tariffs imposed on gems and jewellery exports only to the USA from August to December 2025.
This initiative aims to partially offset the impact of the new tariff structure, mitigate financial strain on exporters, reduce the risk of order cancellations, and help maintain India’s market share in an increasingly competitive and price-sensitive global market, Bhansali said.
The exporters have also sought financial assistance under the Market Access Initiative (MAI) scheme to support the exploration of new markets beyond the traditional US focus. This includes backing for the upcoming SAJEX jewellery exhibition, scheduled from September 11 to 13 in Jeddah, as well as the establishment of an India Jewellery Exposition Centre in Saudi Arabia, modelled on the IJEX-Dubai platform.