US to lift reciprocal tariffs on Indian gems, diamonds subject to interim agreement

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• US to lift reciprocal tariffs on Indian gems, diamonds after interim deal
• Move expected to boost India's gems exports and support millions of livelihoods
• Tariffs caused a 44% drop in India's gems exports to US from April–Dec 2025.

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The United States will remove the reciprocal tariff on gems and diamonds upon the conclusion of the interim agreement with India, according to the fine print jointly released by both countries in February. The move, if materialized, will bring major relief to India’s gems and jewellery sector, which counts the US as its largest export market, contributing about 30% of industry sales.

To be sure, US has eliminated 25 per cent ad Valorem duty on India for purchase of Russain oil bringing down the effective rate from 50% to 25%. Tariffs to come down to 18% for India after an executive order has been issued which could be earlier than March. Both sides are expected to formally sign the trade deal by mid-March.

"Subject to the successful conclusion of the Interim Agreement, will remove the reciprocal tariff on a wide range of goods identified in the Potential Tariff Adjustments for Aligned Partners Annex to Executive Order 14346 of September 5, 2025 (Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements), as amended, including generic pharmaceuticals, gems and diamonds, and aircraft parts," the statement said.

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.

India majorly exports cut and polished diamonds, lab-grown synthetic diamonds, coloured gemstones, synthetic stone, plain and studded gold jewellery, silver and platinum jewellery, imitation jewellery and articles of gold, silver and others. The country processes over 90% of the world's cut and polished diamonds by volume.

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.

"We look forward to reviewing the detailed provisions and engaging further to advance gems & jewellery exports, MSME growth and employment, the Gem & Jewellery Export Promotion Council (GJEPC) said in a tweet, reacting to the joint statement.

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 deal is) expected to support exports from India’s cutting and polishing industry, improving margins and export volumes, said  Ranjeet Mehta, CEO & Secretary General, PHD Chamber of Commerce and Industry (PHDCCI).