<p>Bengaluru: India’s natural diamond polishing industry faces a steep 28-30 per cent fall in revenues to about $12.50 billion this fiscal, compared with $16 billion last fiscal, after the imposition of 50 per cent tariffs (25 per cent reciprocal plus 25 per cent penalty) by the <a href="https://www.deccanherald.com/tags/united-states">US</a>. </p><p>The blow will follow a 40 per cent degrowth over the past three fiscals because of a fall in both prices and sales volume of natural diamonds as demand in the US and <a href="https://www.deccanherald.com/tags/china">China</a> dropped, and competition from lab-grown diamonds rose, according to Crisil Ratings research.</p><p>The 50 per cent tariffs, effective August 27, makes exports to the US tough for two reasons: One, the industry’s low margins make absorption of the incremental levy very difficult and two, declining demand means passing on the incremental burden to consumers will not be easy. </p><p>The consequent reduced operating leverage could erode the operating margin of diamond polishers by 50-100 basis points and pressurise their credit profiles, an analysis of 43 diamond polishers by Crisil shows.</p>.US tariff impact: Textiles sector may see temporary job loss.<p>The Indian polished diamond industry derives 80 per cent of its revenues from exports while the US is a key market for India and accounted for as much as 35 per cent of its exports. Sales started feeling the impact after a 10 per cent tariff was imposed in April 2025. Hence, the share of the US in India's polished natural diamonds slid 1100 basis points in the first four months of this fiscal to 24 per cent.</p><p>Rahul Guha, Senior Director, Crisil Ratings, said, “The upshot is that revenues for the domestic industry, which polishes about 95 per cent of all diamonds produced in the world, is set to drop to its lowest since 2007. To be sure, consumption in India has been increasing sequentially over the years, but the incremental demand doesn’t have the heft to fully offset the losses in the US and China. Additionally, while the UAE has emerged as a dominant hub for India’s exports with its share doubling to about 20 per cent, year-on-year, the risks of a substantial downturn in revenues are high.”</p><p>Given the falling demand, US retailers are unlikely to absorb the tariff cost. Hence, operating margins of diamond polishers would decline to 3.5-4 per cent after dropping 100 basic points (bps) in the past three fiscals from a peak of 5.5 per cent in fiscal 2023.</p>
<p>Bengaluru: India’s natural diamond polishing industry faces a steep 28-30 per cent fall in revenues to about $12.50 billion this fiscal, compared with $16 billion last fiscal, after the imposition of 50 per cent tariffs (25 per cent reciprocal plus 25 per cent penalty) by the <a href="https://www.deccanherald.com/tags/united-states">US</a>. </p><p>The blow will follow a 40 per cent degrowth over the past three fiscals because of a fall in both prices and sales volume of natural diamonds as demand in the US and <a href="https://www.deccanherald.com/tags/china">China</a> dropped, and competition from lab-grown diamonds rose, according to Crisil Ratings research.</p><p>The 50 per cent tariffs, effective August 27, makes exports to the US tough for two reasons: One, the industry’s low margins make absorption of the incremental levy very difficult and two, declining demand means passing on the incremental burden to consumers will not be easy. </p><p>The consequent reduced operating leverage could erode the operating margin of diamond polishers by 50-100 basis points and pressurise their credit profiles, an analysis of 43 diamond polishers by Crisil shows.</p>.US tariff impact: Textiles sector may see temporary job loss.<p>The Indian polished diamond industry derives 80 per cent of its revenues from exports while the US is a key market for India and accounted for as much as 35 per cent of its exports. Sales started feeling the impact after a 10 per cent tariff was imposed in April 2025. Hence, the share of the US in India's polished natural diamonds slid 1100 basis points in the first four months of this fiscal to 24 per cent.</p><p>Rahul Guha, Senior Director, Crisil Ratings, said, “The upshot is that revenues for the domestic industry, which polishes about 95 per cent of all diamonds produced in the world, is set to drop to its lowest since 2007. To be sure, consumption in India has been increasing sequentially over the years, but the incremental demand doesn’t have the heft to fully offset the losses in the US and China. Additionally, while the UAE has emerged as a dominant hub for India’s exports with its share doubling to about 20 per cent, year-on-year, the risks of a substantial downturn in revenues are high.”</p><p>Given the falling demand, US retailers are unlikely to absorb the tariff cost. Hence, operating margins of diamond polishers would decline to 3.5-4 per cent after dropping 100 basic points (bps) in the past three fiscals from a peak of 5.5 per cent in fiscal 2023.</p>