Indian gems and jewellery exports to the United States have come to a sudden halt following the imposition of 26% tariffs by the US administration. Industry leaders say the shock move has left exporters scrambling and buyers unwilling to commit, but they are hopeful that an agreement between the two governments can be reached within the next three months.

“Starting tomorrow, I don’t see any exports going to the USA,” said Adil Kotwal, Chairman of the SEEPZ Gems and Jewellery Manufacturers’ Association (SGJMA). “Everybody has told us to put all orders on hold. They have told us to manufacture it and keep it ready for them.”

Sabyasachi Ray, Executive Director of the Gem and Jewellery Export Promotion Council (GJEPC), echoed the sentiment, calling the current situation a “standstill.” “Gems and jewellery are not essential commodities, and they are also very high-value goods. So, a 26% duty on a million-dollar shipment will not work,” he said.

The short-term impact is expected to be severe. Around 64% of jewellery exports from SEEPZ, roughly $3.5 billion, go to the US market. The increase in tariff from 6% to 26% has raised upfront duties on shipments from $60,000 to $3,20,000 per million-dollar consignment, putting tremendous pressure on exporters’ cash flows.
Retailers in the US, meanwhile, are in no hurry to place fresh orders. According to Kotwal, “Retailers in the United States right now have enough stock for the next three months. Mother’s Day goods have already reached them, so they are not in any rush.”

While talks between India and the US are ongoing, both associations believe a resolution may be in sight. “The government has been in touch with us. And I believe that in the next three months, some resolution should come about,” Kotwal said, adding that the Indian side is pushing for a bilateral trade agreement. He noted that while 26% is unviable, a 10% tariff could be workable. “I think around 10%, we’ll all be very comfortable with that.”

Beyond the US, exporters are also watching other key markets closely. Ray pointed out that while the Hong Kong show in March brought some optimism for diamond exports to China, uncertainty has returned following the tariff announcement. “If you are looking at the two big upper-end diamond markets, they are the US and China. That’s where the focus is,” he said.

The Middle East, another major market, has performed well for gold jewellery following CEPA, but rising gold prices and concerns around crude oil and disposable income have added to the sector’s concerns.

For now, the industry is bracing for a tough few months as they await clearer direction from trade negotiations. The US accounted for $10 billion of India’s gems and jewellery exports in FY24, making the resolution of this issue critical for the sector’s stability.

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