Diamonds are forever: Guj gem and jewellery sector hopes US tariff impact won't last long

Ahmedabad, Aug 27 (PTI) The diamond and jewellery industry in Gujarat, the biggest hub for cutting and polishing diamonds, will be adversely impacted by the tariffs as the US alone accounts for 40 per cent of Indian trade in this sector, industry leaders said.

While the tariffs will make Indian jewellery expensive in the US, industry stakeholders are hopeful that the impact will be temporary, given US customers' obsession with diamonds. Former regional chairman of the Gem and Jewellery Promotion Council, Dinesh Navadiya, said the new tariffs will make Indian products costlier in the US, which is the world's biggest market of diamonds and diamond jewellery with an annual sale of USD 89.54 billion.

"In 2024-25, India's gems and jewellery export to the world was USD 13.3 billion, which includes an export of USD 4.8 billion to the US alone. This means that the US accounts for 40 per cent of our entire export market. This new tariff will increase the prices of our products in the US, eventually affecting Indian exports", said Navadiya.

He said India can leverage Free Trade Agreements with countries like the UAE, UK, and Australia to blunt the impact of the tariff.

"Similarly, if Russia and China announce that they will open their markets for us, it will come as a huge relief. This is a long-term solution. However, the situation is worrisome at the moment due to the 50 per cent tariff," said Navadiya.

The reciprocal tariffs of 25 per cent on India came into effect on August 7 following an announcement by US President Donald Trump, when tariffs on about 70 other nations also kicked in. On the same day, Trump announced doubling the tariffs on Indian goods to 50 per cent for India's purchases of Russian crude oil. The additional tariffs came into effect on Wednesday.

Surat Diamond Association (SDA) president Jagdish Khunt believes that the tariff impact will be a short-term disruption, noting that the US doesn't have any option other than India when it comes to polished diamonds.

"The 50 per cent tariff imposed by the United States on Indian goods will certainly affect the diamond industry. But, the effect will be short-term only," he said, stressing that nine out of 10 diamonds sold in the world are cut and polished in India.

According to Khunt, since the American people are attached to diamonds just like Indians love gold, they will never stop buying the precious stones even if they get expensive.

SDA member Vinubhai Dabhi echoed Khunt and attributed the recent slowdown in the diamond industry to the soaring gold prices.

"Whatever slowdown you are seeing is due to a spike in prices of gold, not because of tariffs. Before this, the US had imposed a 25 per cent tariff in April. Yet, there was not much impact. Now, there is an additional 25 per cent tariff. I think it will leave an impact for a short period and things will be back to normal in 4 to 6 months," said Dabhi.

Sunil Gandevikar, a prominent jeweller from Vadodara, said the demand for Indian jewellery products would dip as they will become expensive in the US market. "The jewellery business is already down 50 per cent compared to last year because of a sudden increase in gold prices. This 50 per cent tariff will make business more difficult because a large quantity of gold and diamond jewellery is being exported to the US. The demand will come down because US residents will have to pay more to buy our products," said Gandevikar. PTI PJT PD NSK