The story to date: India’s diamond and jewellery sector has been hit resulting from the U.S. tariffs. While the U.S. has imposed a 50% import obligation on India’s reduce and polished diamonds, it has imposed a 50-57% obligation on studded and non-studded jewellery, upsetting a long time of well-set commerce. India is the world’s largest exporter of reduce and polished diamonds. At such a time, the sector desires authorities intervention which may take in the shock attributable to U.S. tariffs.
Why authorities intervention?
The U.S. is the largest importer of diamonds from India. In 2024-25, India exported diamonds price ₹46,000 crore and studded gold jewellery price ₹23,000 crore. Moreover, India’s reduce and polished diamond trade employs 8.2 lakh expert employees. The U.S. tariffs are prone to have an effect on the jobs of 1.7 lakh expert employees, as per the Gems and Jewellery Export Promotion Council’s prediction. Of India’s exporters, 85% are Medium and Small Scale Enterprises (MSMEs) which will be unable to bear the shock of the lack of the U.S. market in the quick time period. The trade has due to this fact sought short-term measures by way of coverage reliefs, assist for employees, and financial and advertising and marketing advantages for 3 to 6 months, to assist the producers take in the shock.
Which are the worst-affected States in India?
Gujarat, Rajasthan and Maharashtra are the worst-hit States. Most of the diamonds are reduce and polished in the factories arrange in Gujarat. Rajasthan has a focus of producing of jewellery with gems and semi-precious stones. Maharashtra is a producing hub for studded and non-studded jewellery, and exports most of the diamonds.
What are the sought coverage reliefs?
Some of the key coverage reliefs sought by the trade are: to increase the export obligation interval for exports made to the U.S. from 90 days to 270 days; enable reverse job work in DTAs (Domestic Tariff Areas) by jewellery manufacturing Special Economic Zones (SEZs); and permit SEZs to promote in the home market on fee of obligation foregone. In easy phrases, if a jewellery producer imports gold for the export of jewellery, such export of ready-made jewellery has to happen inside a interval of 90 days. If not, an import obligation of 6% and GST of three% is levied. But with the orders from the U.S. abruptly drying up, many exporters are unable to ship their jewellery. That is why, the trade now desires the export obligation interval to be elevated.
The trade additionally desires the authorities to permit the SEZs to promote their items in the home market with import obligation forgone. Currently, the exporters are allowed to promote in the home market, however with an obligation of 20% on the completed product. This makes them much less aggressive as in comparison with home producers. Reverse job order refers to SEZs being allowed to fabricate for home consumers in order that idle equipment and functionality could be utilised; expert employees can keep gainfully employed; and that factories arrange after years of onerous work can maintain operating.
What are the incentives demanded?
Some of the calls for by the trade are — financial incentives like curiosity subvention provided throughout the COVID interval; non permanent subsidisation of exports to the U.S.; worker-related advantages like restructuring of private loans and inclusion beneath healthcare schemes; and advertising and marketing advantages similar to giving exporters funding to discover newer markets. Other calls for embody banking incentives, liquidity packages, and finance extensions, amongst others.
Why the urgency?
The tariffs are disrupting companies which had been set for nearly 5 a long time. These tariffs will disproportionately have an effect on MSMEs which have invested for years to construct up their companies. While giant exporters will be capable of navigate by means of this alteration, the bottom-line will likely be worn out except the authorities intervenes and offers short-term reduction for 3 to 6 months, says the trade. The complete bailout bundle in the type of numerous incentives is prone to be to the tune of ₹500 crore as per tough trade estimates. “The U.S. forms 30% of India’s gem and jewellery export. Most of this demand is fulfilled by MSMEs, which form the backbone of the sector, and which are now struggling to survive. We need urgent government help,” mentioned Kirit Bhansali, chairperson of Gem and Jewellery Export Promotion Council.
