Zero duty to boost India's gems and jewellery export to EU

Gems and Jewellery

• India-EU FTA cuts tariffs on gems and jewellery exports from 4 percent to zero
• Move enhances India's price competitiveness, aiding MSME-heavy jewellery sector
• Exporters must still meet strict EU norms on traceability and sustainability

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The India–European Union free trade agreement (FTA), which was signed on January 27 after more than a decade  of negotiations, will give a boost to India’s gems and jewellery sector, with tariffs on Indian exports to 27-nation bloc set to fall from 4 percent to zero.

The duty elimination is expected to improve price competitiveness for Indian exporters in one of their largest overseas markets and help reclaim shares lost to rival manufacturing hubs over the past decade. The move also provides support to the industry at a time when sales to the US remain under pressure due to high tariffs.

The EU accounts for a sizable portion of India’s gems and jewellery exports, particularly in polished diamonds, gold jewellery and studded jewellery.

Gems and jewellery exports to EU accounted for 3 percent of India’s overall exports to the European Union between January to November 2025, as Jefferies report said.

A 4 percent tariff may appear modest but in a business where margins are thin and competition intense, even small duty differentials influence sourcing decisions by global buyers. With tariffs removed, Indian manufacturers are likely to find it easier to compete with suppliers from countries that already enjoy preferential access to the European market.

According to industry experts, the zero duty strengthens India’s edge in design-led and precision-driven jewellery exports where speed, craftsmanship and reliability matter as much as price.

Lower landed costs can expand EU demand across plain gold and studded categories, while encouraging deeper relationships with European wholesalers and brands.

Since the sector is MSME-heavy and artisan-supported, the employment multiplier is significant, with gains likely in cutting, polishing, setting, and finishing, experts said.

“EU being India’s second largest trade partner, the FTA comes at a moment of geoeconomic realignment and strategic urgency. While tariff reductions provide a competitive advantage to both economies for sectors such as auto, textile, capital goods, gems and jewellery etc, it also offers an opportunity to address non-tariff barriers through regulatory alignment. It is also expected that it will be one of India’s most progressive FTAs with substantial commitments on digital trade, sustainability, and climate rules, including CBAM,” said Gulzar Didwania, Partner, Deloitte India.

The move is expected to benefit small and mid-sized exporters as well, many of whom struggled to absorb the tariff cost earlier and were forced to either compress margins or cede business to competitors.

Mumbai, Surat and Jaipur, where established export ecosystems can scale faster with improved price competitiveness and simpler market entry, are looking at hefty gains.

Exporters caution that tariff relief won’t be a silver bullet. Compliance with stricter European norms on traceability, sustainability and responsible sourcing will remain critical. Still, by removing a key cost disadvantage, the India–EU FTA gives the gems and jewellery sector a timely push, potentially supporting export growth, employment and value addition in one of India’s most labour-intensive industries