US Tariff Threat May Hit India’s Jewellery Exports

India’s employment-intensive gems and jewellery sector is on edge as the United States prepares to levy a steep 50% tariff on its shipments from August 27, 2025. Announced earlier this month as part of U.S. trade actions linked to India’s continued imports of Russian oil, the move could deal a severe blow to the sector’s competitiveness in its largest export market. For the MSMEs that make up the backbone of this industry, the stakes could not be higher—millions of livelihoods across cutting, polishing, designing, and related services, particularly in Gujarat, Maharashtra, and Rajasthan, hang in the balance.

The U.S. is India’s biggest buyer of gems and jewellery, accounting for around $12 billion annually—nearly one-fourth of the country’s total exports in this category. For smaller exporters who operate on tight margins, a 50% tariff on U.S.-bound goods could wipe out profitability overnight. The impact is already visible: industry estimates suggest that approximately 100,000 jobs have been lost in Gujarat’s diamond hubs of Bhavnagar, Amreli, and Junagadh following earlier tariff hikes this year.

MSMEs are also grappling with a wave of canceled orders and delayed shipments, especially for time-sensitive festive-season consignments like Christmas jewellery. In Surat, production cuts of 30–35% are projected in the coming months, with the likelihood of widespread layoffs unless urgent relief is provided.

To survive, exporters are being forced to consider drastic shifts. Many are exploring relocating parts of their production to low-tariff countries such as the United Arab Emirates, Mexico, Canada, Turkey, and Oman to retain U.S. market access. However, such moves require capital and resources—luxuries that smaller exporters often lack—making government support even more critical.

At the same time, there is a renewed urgency to diversify export destinations beyond the U.S., targeting markets in the Middle East, Europe, East Asia, and Africa. While these regions cannot immediately replace U.S. demand, they offer long-term potential, particularly for India’s premium handcrafted and customised jewellery, where MSMEs have unique strengths. The Gem & Jewellery Export Promotion Council (GJEPC) has urged the government to step in with targeted measures, including duty drawback reimbursements covering 25–50% of the tariff impact, deferment of interest payments, and enhanced export incentives. Without such intervention, many MSME exporters could face closures, triggering a domino effect of job losses and supply chain disruptions.

With exports already down 14.25% year-on-year in June 2025 to $1.63 billion due to weak global demand, volatile gold prices, and geopolitical uncertainties, the impending 50% U.S. tariff could become a breaking point. Unless swift and focused action is taken, India risks losing not only a significant share of its gems and jewellery trade but also the very MSMEs that have sustained its reputation as a global jewellery powerhouse.