More than 2 million Indians work in units that supply 14 out of 15 cut diamonds globally. Trump’s 50 percent tariffs could end that.

US imposes penalty

Meanwhile, on August 6, Trump announced an additional 25 percent tariff, taking the total tariff rate to 50 percent. He termed the additional tariff that would come into effect from August 27 as a penalty for India’s continued buying of Russian oil, as the US president tries to push Moscow into accepting a ceasefire in Ukraine.

For the gems industry, which already faced a pre-existing 2.1 percent tariff, the effective tariff now amounts to 52.1 percent.

Ajay Srivastava, the founder of Global Research Trade Initiative (GTRI), a trade research group, termed the Trump government’s additional hike as an act of “hypocrisy”, citing how the US itself continues to trade with Russia, and how China – Russia’s biggest oil buyer – faces no similar penalty.

“Trump is targeting India out of frustration as it refused to toe the US line on the Russia-Ukraine conflict, and for its refusal to open its agriculture and dairy sector,” he added, referring to broader ongoing trade talks and differences over US demands for greater access to critical Indian economic sectors.

Yet, whatever the reasons for Trump’s tariffs, they are hurting a diamond industry already bleeding from multiple hits.

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Decline in exports

In the 2024-25 financial year, India imported rough diamonds worth $10.8bn, marking a 24.27 percent decline from the $14bn imported in 2023-24, as per the statistics by the GJEPC.

The exports of cut and polished natural diamonds similarly witnessed a 16.75 percent decline, with exports declining to $13.2bn in 2024-25 as compared with $16bn in the preceding year.

“This move [the tariffs] would have far-reaching repercussions on the Indian economy that might disrupt critical supply chains, stalling exports and threatening thousands of livelihoods. We hope to get a favourable reduction in tariffs; otherwise, it would be difficult to survive,” said Kirit Bhansali, the chairman of the GJEPC.

The tariffs could also hurt US jewellers, warned Rajesh Rokde, the chairman of the All India Gems and Jewellery Domestic Council (GJC), a national trade federation for the industry.

“The US has around 70,000 jewellers who would also face a crisis if the jewellery becomes expensive,” Rokde added.

A domestic solution?

Traders say that the need of the hour is to increase domestic demand for diamonds and diversify to new markets.

A stronger domestic market “would not only contribute to the local economy, but would also create jobs for several thousands of people”, said Radha Krishna Agrawal, the director of Narayan das Saraf Jewellers in Varanasi city, in the northern state of Uttar Pradesh.

The tariffs, he said, could prove a “blessing in disguise” if they end up reducing the dependence of India’s gems industry “on other countries”.

Bhansali said that the domestic gems and jewellery market was growing, and expected to reach $130bn in the next two years, up from $85bn at the moment. The industry is also looking for new markets, including Latin America and the Middle East.

Gold already offers an example of a strong domestic market, cushioning the impact of hits on exports, said Amit Korat, the president of the Surat Jewellery Manufacturers Association.

But for now, the diamond sector in India has no such shield. It needs to be saved, urgently, said Patel, the Surat business owner on the cusp of shutting down his polishing and cutting unit.

Without help, he said, “the business will lose its shine forever”.

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