Tariff cut to 18% brings major respite for India’s gems and jewellery sector

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After nearly six months of uncertainty, easing of US–India trade tensions has offered a major relief to India’s gems and jewellery sector, which counts the US as its largest export market, contributing about 30% of industry sales.

The agreed trade deal brings down the  tariffs on Indian exports to 18% effective immediately, from the earlier 50%, while India would move to cut tariffs and non-tariff barriers on American products.

India’s gem and jewellery exports to the United States witnessed a sharp contraction during April–December 2025, declining 44.42% year-on-year to US$ 3.86 billion, compared to US$ 6.95 billion in the corresponding period last year. In December 2025, exports to the US declined by 50.44% year-on-year, reflecting the continued impact of tariff-related pressures and subdued discretionary demand.

The tariffs had doubled US duties on Indian gems and jewellery to 50%, triggering concerns over India’s competitiveness in its largest export market. In FY25, India exported nearly $10 billion worth of gems and jewellery to the US, with diamonds alone contributing $7–8 billion.

The heavy reliance on the American market had left exporters vulnerable, prompting urgent discussions around diversification and alternative destinations.

Gems and jewellery rank as India’s third-largest export category to the US, after engineering and electronic goods, and the sector supports millions of livelihoods across the country. Industry participants had warned that sustained high tariffs could lead to shipment deferrals, job losses and a squeeze on smaller exporters operating on thin margins.

The industry has been counting on the recent FTAs with the UK, Oman, New Zealand and others to further enhance competitiveness by reducing duties and easing trade barriers.

"With the Government of India currently negotiating multiple trade agreements, we are confident these will open new markets and strengthen India’s position globally on quality, value and trust," the Gem & Jewellery Export Promotion Council said in a note earlier this month.