The announcement of a new India–US trade agreement has injected fresh optimism into India’s gems and jewellery industry, which has been under pressure
since steep tariffs were imposed last year by US President Donald Trump. The proposed deal signals a sharp reduction in import duties on Indian shipments to the US. This move could revive exports, improve employment prospects, and stabilise supply chains that have been disrupted for months. Under the initial terms shared by US President Donald Trump, Indian goods entering the US would be subject to an 18 per cent tariff, significantly lower than the 50 per cent levy imposed in August 2025 following India’s purchases of Russian oil. The announcement has been welcomed by exporters, particularly those in the labour-intensive segments such as gems and jewellery, where margins are sensitive to duty changes. Market sentiment reflected this optimism, with jewellery stocks outperforming broader indices. Shares of Kalyan Jewellers surged more than 6 per cent in morning trade, while Titan gained around 3.6 per cent, tracking expectations of improved export demand and earnings visibility. Industry Eyes Zero Duty On Diamonds Beyond the headline tariff reduction, industry bodies are hoping the deal goes a step further. “We are not sure, but we hope that this trade deal also brings in zero duty on diamonds," Sabyasachi Ray, executive director of the Gems and Jewellery Export Promotion Council (GJEPC), told Mint. “That will be a huge bonanza to the industry." The GJEPC has been advocating for the reinstatement of zero tariffs on diamonds polished in Surat and exported to Europe, which are then used in jewellery sold to American consumers. Such a move could restore competitiveness and help Indian exporters reclaim lost market share. Exports, Jobs, and Wages Took a Hit According to data from the commerce and industry ministry, India’s diamond exports to the US declined by more than 58 per cent year-on-year between April and November 2025, falling to $1.36 billion. Overall, jewellery exports dropped nearly 44 per cent to $3.55 billion during the same period, even as gems and jewellery remained India’s fourth-largest export category to the US. “One million people are engaged directly in the diamond sector, so all were affected," Ray said in the report. “And they were really badly affected. Their wages have gone down." He noted that the rapid growth of lab-grown diamonds has helped cushion job losses, although wage pressures persist across the sector. Supply Chains And Demand May Stabilise While the finer details of the agreement are still awaited, analysts believe the effective tariff burden could fall further. “We estimate the effective tariff rate on India might be just around 12-13 per cent as per our estimates, down from almost 30-35 per cent previously," Bank of America’s brokerage arm said in a note. “This would provide significant relief to India’s export sector, especially labour-intensive areas such as gems & jewellery, textiles, agricultural products and engineering goods." There is also renewed hope that the deal will help rebuild the diamond supply chain linking Surat, Belgium, and the US consumer markets. “One of the biggest beneficiaries of the India-EU trade deal which got signed on 27 January, is Belgium, which is a big hub for the diamond industry," Anil Talreja, partner at Deloitte India, told Mint. He added that while clarity is awaited on sector-specific coverage, positive sentiment alone could go a long way in reviving demand.
