The diamond cutting and polishing industry in Gujarat, one of the world’s largest, is reportedly experiencing a sharp decline owing to global disruptions and recent US tariffs.
According to reports, over 3,500 units across Gujarat employ more than seven lakh workers. Now, the sector is witnessing reduced operations, job losses, and growing financial pressure.
India, with no diamond mines of its own, relies entirely on imports of rough stones. It sources mainly from South Africa and Ukraine.
These imports totalled $14.26 billion in FY 2023–2024. The following fiscal year changed it all. Imports, media houses highlighted, fell precipitously to $10.8 billion. The war between Russia and Ukraine further hampered the supply chain. It tightened the flow of raw stones into the nation.
The US remains India’s largest market for cut and polished diamonds. In FY 2024–25, India exported $4.8 billion worth of cut and polished diamonds to the US, nearly one-third of its total exports in the category. However, the imposition of a 50 per cent tariff by the US, raised incrementally, has rendered trade economically unfeasible.
Production across various units has reduced by over 50 per cent in many places, and the number of active polishing machines has dropped. The workforce in numerous units has also been halved. A significant number of workers, particularly migrants from other states, have returned to their native places as employment opportunities decline.
Larger companies are attempting to navigate the downturn by exploring new markets and maintaining operations through financial reserves. It’s the smaller units that are struggling to stay afloat. Industry stakeholders have started considering alternative routes such as setting up operations in Thailand and Hong Kong, where no such US tariffs currently apply.
Speaking with a media outlet, the Surat Diamond Association (SDA), India’s largest body of diamond manufacturers, has expressed hope that demand in the US will rebound during the festive season. It has also stated that sustained tariffs will eventually impact US buyers, who may pressure their government to reconsider the trade policy.
Despite this, workers in the industry continue to face uncertainty. The Diamond Workers’ Union (DWU) has disputed claims of minimal layoffs, citing government data indicating over one lakh job losses in the sector. Many factories, which once ran multiple shifts, are now operating at reduced capacity.
The state government had announced a support scheme to fund the school fees of children whose parents lost jobs in the diamond sector. By early September, nearly 86,000 applications were received, but only 170 beneficiaries had been supported under the scheme, according to official data.
The current downturn comes on the heels of earlier setbacks caused by demonetisation and the COVID-19 pandemic. Industries that support diamond processing, like those that sharpen cutting tools, are also facing steep declines in demand. The scenario has added to job losses and financial strain across the sector.
The industry continues to call for urgent government intervention, including financial relief and policy support. As trade talks between India and the US resume, the sector remains hopeful for resolution.
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