Diamonds and Rust: A Tale of Value and Decay

Rapid Summary:

• Tariff Increase: The U.S. imposed steep tariffs on India’s gold and diamond exports starting April 2025, escalating from 10% to as high as 50%, severely impacting the indian gems and jewelry sector.
• Export Dependency: Over 30% of India’s cut and polished diamonds are exported to the U.S., while SEEPZ in Mumbai caters primarily to the American market for gold jewellery.
• Export Decline: Gems and jewellery exports to the U.S. have dropped by 39%, with predictions of a potential 75% decline. Countries like Thailand, Vietnam, Dubai, and Turkey might gain market share.
• Industry Struggle: Small and medium enterprises are particularly vulnerable due to limited resources; large exporters may handle initial shocks better but face long-term challenges.
• Worker Impact in Surat: Around 10 lakh workers in Gujarat’s diamond industry have been under financial strain since the Russia-Ukraine war; their wages have reduced substantially. Job losses are expected around Diwali without goverment intervention.
• Relief Measures Lagging: The Gujarat government announced relief schemes for affected artisans but has disbursed aid minimally despite receiving tens of thousands of applications.

Indian Opinion Analysis:

The escalating tariffs imposed by the U.S. on indian gems and jewellery exports signify a serious disruption in bilateral trade dynamics that can ripple across various segments within India’s economy. The immediate impact falls hardest on large employment bases such as skilled artisans in Mumbai’s SEEPZ zone or ratna kalakars of Surat, whose livelihoods depend heavily on this sector’s stability.

India’s ability to pivot its focus toward alternative markets like China or Southeast Asia is critical but not easily achieved due to demand preferences tied deeply with existing relationships built over decades-especially with american businesses leveraging flexible payment terms offered by Indian exporters.

Short-term measures like regulatory easing could provide breathing room for affected enterprises while structural adjustments related to diversification efforts will take longer timelines. If support systems fail during this period-including timely government schemes for workers-the economic fallout could extend beyond trade numbers into social hardship scenarios affecting millions employed directly or indirectly.

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