India’s gems and jewellery exports to the United States have plummeted to a five-year low, with shipments collapsing 45% year-over-year to $5.09 billion as Washington’s escalating tariff regime has dismantled one of the country’s most significant export sectors. The sharp contraction reflects the cumulative impact of reciprocal tariffs imposed by the Trump administration followed by an additional 25% duty on Indian goods, disrupting supply chains and dampening demand across the crucial transatlantic trade corridor, according to data from the Gems and Jewellery Export Promotion Council (GJEPC).
The U.S. remains India’s single largest market for gems and jewellery exports, historically accounting for roughly 40-45% of total outbound shipments from the sector. This export corridor has long served as a critical revenue engine for India’s jewellery manufacturing hubs, particularly in Gujarat, Maharashtra, and Tamil Nadu, supporting hundreds of thousands of workers across cutting, polishing, and design operations. The sector’s collapse to five-year lows signals not merely a temporary trade friction but a structural disruption that threatens the viability of numerous mid-sized exporters who operate on thin margins and depend on predictable tariff regimes to maintain profitability.
The trajectory of these tariffs reveals a deliberate escalation. Initial reciprocal tariffs imposed by Washington disrupted flows for several months, creating uncertainty among importers and forcing buyers to delay orders or seek alternative suppliers. The subsequent imposition of an additional 25% duty on Indian goods — part of broader geopolitical and trade policy recalibrations — has essentially priced Indian jewellery out of its most important market. At a 45% year-over-year decline, the sector is experiencing its steepest contraction in half a decade, eroding years of steady growth and investment in manufacturing capacity and design innovation.
The quantified impact is staggering. A $5.09 billion annual export figure represents not only a loss of export revenue but a cascading effect through India’s supply chain. Mining operations that feed rough diamonds and precious stones into the pipeline, cutting and polishing workshops, design houses, and logistics providers all face reduced utilization and cash flow constraints. Workers in manufacturing-heavy states like Gujarat, where the diamond-cutting industry is concentrated, face reduced shifts and overtime. Small and medium enterprises (SMEs) that typically operate with limited working capital have limited ability to absorb prolonged demand shocks, raising bankruptcy risks across the sector.
Industry stakeholders have characterised the tariff environment as punitive and unworkable. Exporters argue that Indian gems and jewellery products compete on quality, craftsmanship, and cost efficiency — not on currency manipulation or unfair practices — and that blanket tariffs ignore the sector’s integrated role in global supply chains. The GJEPC and industry bodies have called for dialogue with U.S. trade authorities, though the political calculus in Washington appears focused on confrontation rather than negotiation. Meanwhile, alternative markets — including the Gulf States, China, and Southeast Asia — remain constrained by either lower demand, different consumer preferences, or their own tariff barriers, limiting options for rapid market diversification.
The broader implications extend beyond export revenue and employment. India’s gems and jewellery sector contributes meaningfully to foreign exchange inflows, government tax revenues, and the country’s trade balance. A sustained contraction of this magnitude weakens the current account position and signals broader vulnerability to tariff-driven shocks across other export sectors — textiles, pharmaceuticals, and automotive components all face similar risks if trade tensions escalate further. The sector’s struggle also illuminates the precarity facing India’s export-dependent manufacturing model in an era of rising protectionism and geopolitical fragmentation.
Looking ahead, the trajectory depends on whether tariff levels stabilise, decrease, or escalate further. Industry observers are watching for any indication that negotiations might reduce duties or provide sector-specific relief. Longer-term, exporters may accelerate investments in alternative markets and production locations, including nearshoring to other countries with lower tariff exposure, though such pivots require substantial capital investment and time. The five-year export low may yet deepen if tariff rates remain unchanged or climb higher. For now, India’s jewellery sector faces an extended period of contraction, reduced capacity utilisation, and difficult choices about workforce retention and investment priorities — with little certainty about when tariff-driven headwinds might ease.
