Shining Through the Storm: India’s Diamond Industry Banks on Local Sparkle

India’s diamond industry, a global hub for cutting and polishing natural diamonds, is facing a significant challenge due to the steep 50% tariffs recently imposed by the US government. This tariff increase, part of a broader trade strategy, threatens to disrupt the flow of goods and endanger thousands of livelihoods, especially in Surat—the world’s diamond processing capital. However, industry stakeholders are optimistic that a strong domestic market and new international avenues could help cushion the impact of this trade shock.

 

Key Highlights of the Situation

 

The US government escalated tariffs on Indian diamond imports from 25% to 50% in August 2025, citing India’s continuing purchase of Russian oil. This move represents a heavy blow to India’s polished diamond exports, nearly one-third of which are shipped to the US.

 

India accounts for about 90% of global diamond cutting and polishing, employing over 2 million people mainly in Gujarat’s Surat, Ahmedabad, and Rajkot.

 

Due to the tariffs and diminished demand from key markets like China, Indian diamond exports have fallen to their lowest in two decades, with export values dropping nearly 17% year-on-year.

 

The high tariffs have caused cancellations and delays in orders, leading to shrinking revenues and job losses in diamond units, many of which operate on thin margins.

 

Industry veterans warn that up to 200,000 jobs could be at risk if the tariffs and resulting order cancellations persist, with small and medium enterprises particularly vulnerable.

 

The rise of lab-grown diamonds, priced at roughly 10% of natural diamonds, is increasing competition and cutting into natural diamond market share, adding to industry pressures.

 

The cancellation of US orders has encouraged Indian exporters to explore alternative markets such as Europe, Russia, and Latin America, though finding new buyers remains challenging.

 

Despite export setbacks, India’s domestic diamond consumption is growing rapidly and recently overtook China to become the second-largest global market, providing a vital buffer.

 

Domestic retail growth is projected to lift the overall gems and jewelry market from $85 billion to $130 billion within two years, according to industry experts.

 

Industry leaders advocate for government support and policies to sustain the diamond sector through this turbulent period, emphasizing the need for export incentives and trade negotiations to reduce tariffs.

 

Experts note the parallel resilience of India’s gold market, where strong domestic demand helps offset international disruptions, suggesting diamonds could follow a similar path.

 

Sector Impact and Human Stories

 

Artisans who have worked in the diamond industry for decades face wage cuts, with some earning as little as Rs 15,000-17,000 per month amidst rising inflation and cost pressures.

 

The emotional and economic toll has been high, with reports of worker distress and layoffs highlighting the urgency for intervention.

 

Factory owners express deep concern about the viability of their businesses if tariffs remain unchanged, fearing permanent closures and erosion of India’s global leadership.

 

The recently inaugurated Surat Diamond Bourse, the world’s largest office complex for the industry, is underutilized, reflecting the slowdown in trade and operations.

 

Looking Ahead: Strategies and Hope

 

The industry is diversifying its export portfolio, targeting regions like the Middle East and Latin America to expand opportunities.

 

Scaling up domestic marketing campaigns and consumer awareness efforts are seen as key to stimulating demand within India.

 

Innovative product development, including incorporating Indian cultural motifs and new luxury designs, is planned to enhance global competitiveness.

 

Industry bodies continue negotiations with policymakers to seek tariff relief and trade agreements conducive to seamless cross-border commerce.

 

Investments in technology and skill upgradation aim to improve efficiency and product quality, attracting a new generation of jewelers and consumers.

 

Conclusion

 

While the US tariff hike poses a formidable threat to India’s diamond industry, stakeholders place considerable faith in the country’s burgeoning domestic market and strategic diversification to soften the blow. The coming months will be critical for the sector’s recovery, requiring coordinated action from industry leaders, government bodies, and trade partners to sustain India’s unparalleled stature in the global diamond trade.

 

Sources: New York Times, Economic Times, Al Jazeera, Reuters, Hindustan Times