India’s gems and jewellery industry is scrambling to find alternatives as it braces for the fallout from the US government’s decision to raise tariffs on Indian imports to a steep 50%. With the US being India’s largest export market, this move could have a far-reaching impact on trade volumes, revenues, and jobs.
The sector currently exports over $10 billion worth of goods to the US annually, accounting for nearly 30 percent of India’s global jewellery exports. A tariff shock of this magnitude could lead to a 20–50 percent drop in revenue for US-linked segments, warn exporters.
“A 50 per cent export tax proposal from the US…could severely undercut India's pricing advantage, wiping out margins and triggering immediate disruptions in order flows,” said Rupesh Jain, Co-Founder of Lucira, a lab grown diamond jewellery brand.
But instead of being paralysed, Indian exporters are already exploring alternatives such as rerouting shipments through low-tariff countries to refocusing on the domestic market.
Rerouting through FTA countries
One immediate workaround being explored is re-exporting jewellery via countries that have Free Trade Agreements (FTAs) with the US, such as the UAE, Singapore, or Mexico. Setting up processing hubs or entering joint ventures in these countries could help Indian goods qualify for lower tariff entry into the US.
“This could prompt Indian jewellery exporters to explore strategies to reroute exports through countries with lower or no US tariffs,” said Sanket Desai, Indirect Tax Partner, EY India.
However, this comes with significant operational and legal hurdles. Exporters would need to invest in overseas infrastructure and comply with local regulations.
Gems and jewellery industry body GJEPC Chairman Kirit Bhansali cautioned against undermining the spirit of legitimate trade. “We are concerned about the possibility of trade rerouting… impacting transparency.”
Priyanka Silotia, Founder of jewellery brand Embrell, added that rerouting isn’t viable for everyone, particularly smaller, demi-fine brands operating on thin margins. “It’s not a scalable solution for all exporters,” she noted.
Lance Barboza, CEO & MD, Flomic Global Logistics Ltd., warned that such rerouting adds “more time, cost, and regulatory headaches,” forcing some exporters to consider alternative markets altogether.
Domestic market may emerge as key buffer
As exports to the US become costlier, many Indian jewellers are looking inwards. Rising urbanisation, disposable incomes, and interest in lab-grown diamonds are fuelling demand within India.
“This could trigger Indian jewellery companies to pivot toward domestic markets to offset potential losses,” said EY India’s Desai.
“Indian businesses could focus on the local market, where demand for jewellery is on the rise,” said Disha Shah, Founder of DiAi Designs. “This shift might offer stability for smaller businesses.”
But pivoting to the domestic market isn’t as simple as it sounds.
Products designed for Western buyers differ significantly in design sensibilities and pricing. Adapting to Indian preferences will require changes in product development and marketing.
“Faced with significant barriers to export, brands are reordering their resources… to meet the demand for luxury, home-grown products,” said Embrell’s Silotia. “While the domestic market may not entirely offset lack of revenue from the US, it serves as a critical buffer.”
However, despite these strategies to mitigate the impact of higher US tariffs, the broader impact on the sector could be severe.
India’s gem and jewellery sector supports over 5 million workers across hubs like Surat, Mumbai, and Jaipur, where thousands are employed in cutting, polishing, and setting operations. Any export disruption could cascade into job losses and factory shutdowns.
"With revised tariffs, the entire industry may come to a standstill, placing immense pressure on every part of the value chain—from small karigars to large manufacturers," said GJEPC Chairman Bhansali.
Countries like Thailand (19 percent), Vietnam (20 percent), and Turkey (15 percent) currently enjoy much lower US tariffs, putting Indian exporters at a sharp competitive disadvantage. As American buyers look for cheaper alternatives, India risks losing its once-dominant position.
“In the short term, the impact could be devastating,” said Jain of Lucira. “But in the long term, this may also push the industry to become more resilient, diversify markets, and reimagine supply chains.”
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