India's $32 billion gems and jewellery industry is bracing for a significant decline in exports following the imposition of a 26% tariff by the United States, its largest market. The move, announced recently, is expected to significantly impede overseas sales and cast a shadow over the industry's prospects.
"The tariff is higher than expected and is quite severe," commented Colin Shah, Managing Director of Kama Jewelry, a leading Indian diamond jewellery manufacturer. "It will undoubtedly affect exports."
India holds a dominant position in the global diamond industry, processing an impressive nine out of every ten diamonds worldwide. The United States consumes a substantial portion of this output, accounting for nearly $10 billion, or 30.4%, of India's annual gems and jewellery exports.
Gems and jewellery represent India's third-largest export to the United States, following engineering and electronic goods. The sector is a significant employer in India, providing livelihoods for millions.
The imposition of the US tariffs compounds existing challenges. The industry has already been facing headwinds from weakened demand in China, leading to a 14.5% drop in exports to $32.3 billion in the 2023-24 fiscal year (April-March).
Industry stakeholders are now pinning their hopes on a long-term bilateral trade agreement with the United States to mitigate the negative impact.
"We're are pretty hopeful that India could land a trade deal with the U.S. in the next few months. So, we just need to push through this tough phase for a little while longer," stated Shaunak Parikh, Vice Chairman of the Gem and Jewellery Export Promotion Council (GJEPC). He emphasized the urgency and importance of the ongoing trade negotiations between the two countries.
India and the United States are currently engaged in talks aimed at securing an early trade deal, a development that the Indian gems and jewellery industry hopes will provide a crucial lifeline amidst these challenging circumstances.