India's Jewellery Exports Face Sharp Decline Amid US Tariffs

The imposition of a 26% tariff on Indian jewellery exports by the US Trump administration marks a significant turning point in the global trade landscape. This move, part of a broader strategy to address perceived trade imbalances, is set to have profound implications for India's jewellery industry, which has long relied on the US market for a substantial portion of its exports. The tariff, effective from April 9, 2025, is expected to disrupt supply chains, increase costs, and potentially lead to a sharp decline in India's market share in the US.

The US is India's largest market for gems and jewellery, accounting for nearly 30% of India’s total exports in this category. The tariff will increase the cost of Indian jewellery in the US market, making it less competitive compared to products from countries with lower or no tariffs. For example, Jordan enjoys duty-free access to the US, while France and Italy impose much lower tariffs compared to India. This could lead to a substantial loss of business for Indian manufacturers.



The immediate impact of the tariff will be an increase in the cost of Indian jewellery in the US market, making it less competitive compared to products from countries with lower or no tariffs. This could lead to a substantial loss of business for Indian manufacturers, who may struggle to maintain their market share in the face of increased competition from countries with more favorable trade agreements.

The long-term impact of the tariff is likely to be even more significant. Indian manufacturers may consider relocating their operations to countries with more favorable trade agreements with the US, such as Oman, Singapore, or the UAE. This relocation could help exporters avoid the higher tariffs imposed by the US and maintain their competitiveness in the US market. However, it would also require significant investment and could disrupt existing supply chains.

The industry is exploring alternative markets to reduce dependence on the US, including Latin America, Vietnam, and Saudi Arabia. The Gem and Jewellery Export Promotion Council (GJEPC) is actively pursuing free trade agreements with several key countries to secure better terms for Indian exporters. This diversification can help Indian exporters maintain their business and reduce the impact of higher tariffs in the US.

In addition to market diversification, the industry is also focusing on technological innovation and sustainability to remain competitive. This includes leveraging digital platforms to reach US buyers directly and investing in sustainable manufacturing practices. By differentiating their products through innovation and sustainability, Indian exporters can attract buyers who are looking for unique and eco-friendly products, thereby reducing the impact of tariffs.

The US tariff on Indian jewellery exports is a stark reminder of the interconnected nature of the global economy. It highlights the need for countries to work together to address trade imbalances and promote fair and reciprocal trade. The tariff is also a call to action for Indian manufacturers to diversify their markets, invest in innovation, and adopt sustainable practices to remain competitive in the face of changing trade dynamics.

In conclusion, the 26% tariff imposed by the US on Indian jewellery exports will have a significant short-term impact on the profitability and market share of Indian jewellery manufacturers due to increased costs and reduced competitiveness. In the long term, manufacturers may need to relocate operations, diversify markets, and invest in technological innovation to mitigate the impact and maintain their market position. The industry's response to this challenge will shape the future of India's jewellery exports and its role in the global trade landscape.

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