Gems and jewellery exports fall to five-year low on U.S. tariffs
India's gems and jewellery exports fell to a five-year low as shipments to the United States plunged 45% year-on-year to USD 5.09 billion, according to data from the Gem and Jewellery Export Promotion Council (GJEPC).
The sector had been disrupted for several months after Washington first imposed "reciprocal tariffs" — 26% on gems and jewellery — and subsequently added a further 25% duty on Indian goods, taking the effective rate to 55% at its peak.
The steep tariff increase made Indian-origin jewellery uncompetitive in the US market relative to other suppliers, causing a severe demand shift away from Indian products.
The India-US bilateral trade framework announced in February 2026 provides relief: it envisages a revised 18% tariff on jewellery and zero duty on diamonds and coloured gemstones — but this framework requires recalibration following the US Supreme Court's IEEPA ruling, delaying certainty for the sector.
GJEPC has projected that the tariff rollback under the India-US trade deal, once implemented, could lift exports to the US by up to USD 3 billion in the near term.
Meanwhile, India has diversified exports: UAE (+23.71%), Hong Kong (+33.5%), Australia (+36%), and France (+36%) showed robust growth in the April 2025-January 2026 period.
India's Gems and Jewellery Sector: Economic Significance
Gems and jewellery is one of India's most important export industries, combining large-scale employment with high export value and deep integration with global supply chains.
Key Details
- India is the world's largest cutting and polishing centre for diamonds — approximately 90% of the world's diamonds (by volume) are cut and polished in India, primarily in Surat (Gujarat).
- The sector contributes approximately 7-8% of India's total merchandise exports in a typical year (value terms, approximately USD 30-35 billion annually pre-disruption).
- It is a major employer of artisans and semi-skilled labour, with an estimated 4-5 million workers engaged across the value chain.
- Key export destinations: USA (largest by value), UAE, Hong Kong, Belgium, Israel.
- GJEPC (Gem and Jewellery Export Promotion Council) is the apex industry body, established under the Export Promotion Councils Act; it is the official data source for sector exports.
- The sector is highly sensitive to import duties in destination countries because gems and jewellery are discretionary, high-value goods where price competitiveness is critical.
The US, historically India's largest gems and jewellery export market, became unviable at effective tariff rates of 55% — causing exports to collapse 45%. The sector's recovery is directly tied to the progress of India-US trade negotiations.
US Reciprocal Tariffs and the IEEPA Framework
The Trump administration's "reciprocal tariff" policy, announced April 2025, imposed sweeping country-specific tariffs on imports from major trading partners, justified under IEEPA (International Emergency Economic Powers Act).
Key Details
- India was assigned a 26% "reciprocal tariff" under the initial IEEPA proclamation of April 2025.
- An additional 25% tariff was later imposed on specific Indian goods categories (including gems and jewellery), bringing the effective combined rate to ~55% for jewellery at peak.
- IEEPA tariffs were struck down by the US Supreme Court in February 2026, prompting replacement under Section 122 of the Trade Act of 1974 (10% surcharge, valid 150 days from February 24, 2026).
- The India-US bilateral framework (announced February 2026) pre-emptively negotiated: 18% tariff on jewellery and zero duty on natural diamonds and coloured gemstones — positions that now need to be restructured within the post-IEEPA legal framework.
- The US is India's largest gems and jewellery export market; a high tariff regime directly hits the most export-intensive sector.
The five-year-low in exports reflects the cumulative impact of approximately 9-12 months of elevated US tariffs; the path to recovery runs through successful conclusion of the India-US trade deal to restore lower, competitive duty rates.
Export Promotion Councils: Role and Structure
Export Promotion Councils (EPCs) are key institutional actors in India's trade ecosystem, providing industry-specific data, advocacy, and export support.
Key Details
- EPCs are non-profit organisations set up under the Ministry of Commerce and Industry to promote exports of specific product categories.
- Functions: data collection, market intelligence, trade fair participation, liaison with government on policy, export certification.
- GJEPC (Gem and Jewellery Export Promotion Council) was established in 1966 and is headquartered in Mumbai; it issues export certification and maintains detailed trade statistics for the sector.
- Other major EPCs: APEDA (Agricultural and Processed Food Products Export Development Authority — technically a statutory authority under APEDA Act 1985), EEPC India (Engineering Exports), FIEO (Federation of Indian Export Organisations), PHARMEXCIL (Pharmaceuticals).
- EPCs serve as the official data source for sector-specific trade statistics (supplementing DGCI&S aggregate data).
The GJEPC data showing a 45% drop in US exports and five-year-low overall performance is the primary statistical basis for assessing the tariff damage — and EPCs play a crucial role in lobbying the government for relief and informing FTA negotiations with specific sector data.
- Gems and jewellery exports FY2025-26 (Apr 2025-Jan 2026): USD 23.19 billion (-0.64% in USD terms, +3.57% in rupee terms)
- Exports to the US: fell ~45% to USD 5.09 billion (five-year low)
- Peak US tariff on Indian gems and jewellery: approximately 55% (26% reciprocal + 25% additional)
- India-US trade deal tariff proposal: 18% on jewellery, zero on diamonds and coloured gemstones
- Projected export uplift from tariff normalisation: up to USD 3 billion
- Gems and jewellery as % of India's merchandise exports: ~7-8% (normal year)
- India's share in global diamond cutting and polishing: ~90% by volume
- Major cutting centre: Surat, Gujarat
- Sector employment: ~4-5 million workers
- GJEPC founded: 1966; HQ: Mumbai
- Market diversification wins: UAE +23.71%, Hong Kong +33.5%, Australia +36%, France +36%