Machines are falling silent, and workers are growing anxious by the day. The tariff shock from the United States threatens to dim India’s shine in the global gem market. India’s hub of diamond industry Surat is naturally the most impacted.
With Christmas just months away — traditionally the busiest season for diamond exports — US President Donald Trump’s decision to impose a steep 50 per cent duty on Indian gems has sent ripples of uncertainty through an industry already grappling with shrinking orders, falling prices, and looming job losses.
The US remains India’s largest export destination, accounting for nearly one-third of the country’s annual gems and jewellery shipments, making the sector particularly vulnerable to shifts in American demand and trade policy.
As the world’s largest supplier of cut and polished diamonds, India now faces a critical test of resilience.
An ongoing struggle
India’s diamond industry has been grappling with challenges for a while now. Only recently, rating agency ICRA expected exports of cut and polished diamonds (CPD) to fall by another 7–10 per cent in FY2026 — after hitting a 20-year low in FY2025 — citing the continued demand pressure in the US and the tariff uncertainty. The outlook for the sector, it said, remained firmly negative.
India’s exports of cut and polished diamonds fell to a near 20-year low in the 2024–25 fiscal year, ending in March, as demand from key markets like the United States and China weakened sharply.
Exporters panicked and understandably rushed to fulfill orders in March that saw a 1% dip ahead of the anticipated US tariff hike. India’s total gem and jewellery exports fell 12 per cent to $28.5 billion. It underscored the broad-based challenges facing the sector.
To add to the grim picture, shipments saw a dip by 17 per cent year-on-year to $13.29 billion.
Advantage Israel
According to the latest reports, experts have warned that the additional US tariffs are likely to significantly impact exports of non-industrial diamonds — those used in jewellery and investment — from India.
In 2024, India supplied 68 per cent of the US’s diamond imports by volume and 42 per cent by value. It amounted to $5.79 billion, according to the Gem & Jewellery Export Promotion Council (GJEPC).
Israel, the second-largest source by value at 28 per cent, faces a much lower tariff of just 19 per cent. Understandably, it has an edge in the American market.
Exports of cut and polished diamonds (CPD) from India to the US have nearly halved over the past three years, falling from $9.86 billion in 2021–22 to $4.81 billion in 2024–25.
GJEPC chairman Kirit Bhansali told a national newspaper that Surat and Mumbai will be severely hit by the tariff blow.
He noted that exports of cut and polished diamonds to the US had declined sharply from $9.86 billion in 2021–22 to $4.81 billion in 2024–25. This despite the fact that the US remains India’s largest market, accounting for nearly a third of its annual gems and jewellery exports.
According to the report, the council had written to the commerce ministry to highlight a year-on-year drop in June exports. It pointed to 23.49 per cent for CPD and 24.95 per cent for lab-grown diamonds. Furthermore, the council cautioned that the 50 per cent tariff could lead to job losses of up to 1.25 lakh Gujarat, Maharashtra, and Rajasthan could be the most affected.
According to industry players, rough diamond prices, which stood at $1,000 per carat during the high in 2022–23, have now dropped to approximately $600 per carat. The scenario is driven largely by weak international demand for polished diamonds.
Why Surat is severely impacted…
Where does the scenario leave Surat, the epicentre of India’s diamond industry? It will leave around 5,000 factories employing over six lakh skilled polishers vulnerable, the report cautions. Many of the migrants hail from Gujarat’s Saurashtra region.
Surat also houses a special economic zone and the Gujarat Hira Bourse.
Industry insiders also fear that the abrupt hike in US tariffs could erode India’s market share, trigger order cancellations, lock up working capital, and threaten both employment and the viability of MSMEs.
Bhansali pointed out that competing countries like Turkey, Vietnam, Thailand, and Dubai face lower US tariffs of 15 per cent to 20 per cent, making Indian diamond exports less competitive. He also warned of the potential for trade rerouting through low-tariff destinations such as Mexico, Canada, the UAE, and Oman — a shift that could significantly impact India’s export volumes.
With the UK recently scrapping duties on gems and jewellery imports from India, diamond merchants may look to the British market as an alternative, though exports there remain much smaller than to the U.S.—$941 million versus $9.24 billion last year. Until April 2025, there were no tariffs on Indian diamond exports to the US.
Meanwhile, De Beers, which supplies a third of the world’s rough diamonds, cut production by 36 per cent in Q2 2025 to help stabilise the market amid prolonged weak demand—a move closely watched by Surat’s diamond industry, the report mentioned.
Cautious optimism
As rough diamond production declined, Surat’s cutting and polishing units scaled back operations, cutting polishers’ working hours. Many manufacturers shifted focus to producing lab-grown diamonds (LGDs), which are more affordable than natural stones. One factory owner in Katargam, who once employed over 70 polishers, now operates with just 10 workers, the news report highlighted.
Jewellery exporters, in the meantime, have expressed cautious optimism. They believe US buyers would continue purchasing diamond-studded jewellery even if it means opting for smaller sizes. It is hoped they would push their existing orders ahead of the August 27 deadline for the 50 per cent tariff.
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