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Industrials
How US Tariffs Threaten Jobs and Exports in India’s Diamond Industry: Implications for Surat and Beyond
The recent imposition of steep US tariffs on Indian diamond and jewelry exports has sent shockwaves through one of the world’s most vital gem processing hubs—Surat, India. With the United States accounting for over 30% of India’s gem and jewelry exports, the 27% reciprocal tariff announced in April 2025 threatens to disrupt the industry’s fragile recovery and imperil thousands of jobs in the diamond polishing capital of the world.
In an effort to protect American workers and address trade imbalances, the Trump administration announced a 10% baseline tariff on imports from all countries starting April 5, 2025, with higher duties imposed on countries with large US trade deficits. India faces a 27% tariff on all gems and jewelry products shipped to the US, effective April 9, 2025. This tariff is significantly higher than anticipated and far exceeds Indian exporters’ previous expectations of around 10-15% duties[2][4].
The tariff impact covers a wide range of products:
These sharp increases disrupt pricing structures and are likely to raise US retail prices for diamond jewelry, dampening consumer demand[2][3].
Surat, Gujarat, is often called the diamond polishing capital of the world, processing more than 80% of the world’s rough diamonds and accounting for around 90% of global polished diamond processing[1]. The industry employs over 800,000 workers directly and indirectly and is a key economic pillar in the region.
The gems and jewelry sector is India’s third-largest export to the US, totaling nearly $10 billion in fiscal year 2023-24, making the US the largest single market for Indian diamond exports[1][3][5].
The immediate fallout from the tariffs has been a sharp decline in demand from US buyers, with many exporters rushing to ship orders before the tariffs took effect[1][2]. Industry leaders foresee a short-term contraction with inevitable job losses, particularly among smaller manufacturers and polishing units.
The tariff imposition comes at a time when the Indian gem and jewelry industry was already grappling with multiple challenges:
These factors combined with the US tariffs pose a threat to the long-term stability of India’s diamond cluster.
Indian exporters are looking to diversify their markets to make up for lost US demand, but no other country matches the size and premium nature of the US market[1]. Some firms are considering routing shipments through Dubai, which faces only a 10% US tariff, though this presents challenges related to certification and capacity[5].
The Indian government and industry bodies like the Gem & Jewellery Export Promotion Council (GJEPC) are actively engaging with US officials to negotiate a bilateral trade agreement. Such a deal could eliminate or reduce tariffs, providing much-needed relief and long-term stability[2][4][5].
Industry leaders have also urged the Indian government to implement short-term support to help manufacturers survive the immediate fallout:
The diamond polishing industry is a vital employment generator in Surat and its environs. Layoffs not only affect the workers but also ripple through the local economy dependent on this sector.
The Indian diamond industry faces a critical juncture in 2025. While immediate impacts are bleak, longer-term survival will depend on government negotiations, diversification of export markets, and adaptation to evolving industry trends including lab-grown diamonds.
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The imposition of 27% US tariffs on Indian diamond and jewelry exports threatens to undermine the competitiveness of India’s diamond polishing industry and jeopardize thousands of jobs, especially in Surat. With the US representing nearly one-third of India's gem exports, the sudden cost increase could lead to a significant contraction in demand and force many smaller manufacturers to shutter operations.
While the industry scrambles to mitigate short-term losses by expediting shipments and exploring alternate routes, the resolution likely lies in accelerated bilateral trade negotiations between India and the US. The future of India’s diamond sector hinges on strategic government intervention, market diversification, and innovation to retain its position as a global polishing leader in a challenging economic landscape.
The coming months will be critical for the survival and revival of this cornerstone industry that not only powers India’s exports but also sustains the livelihoods of hundreds of thousands of workers. Stakeholders worldwide will be closely monitoring how India navigates this tariff-induced crisis in its diamond industry.
