Impact of US Reciprocal Tariffs on Indian Gem & Jewellery Exports: Mr. Kirit Bhansali, Chairman, GJEPC
The US announcement of a sweeping 50% tariff on all Indian goods is a deeply concerning development. This move would have far-reaching repercussions across India’s economy—disrupting critical supply chains, stalling exports, and threatening thousands of livelihoods. The Indian gem and jewellery sector, in particular, stands to be severely impacted. The United States is our single largest market, accounting for over $10 billion in exports—nearly 30% of our industry’s total global trade. A blanket tariff of this magnitude is severely devastating for the sector
Market Dependency
There is significant dependency on the US market, as 85% of exports from SEEPZ SEZ, which provides 50,000 jobs, is directed there. For cut and polished diamonds, half of India’s exports are US-bound. With revised tariff hike, the entire industry may come to a standstill, placing immense pressure on every part of the value chain—from small karigars to large manufacturers.
Competitive Concerns
What adds to the concern is that competing manufacturing hubs such as Turkey, Vietnam and Thailand continue to enjoy significantly lower tariffs of 15%, 20% and 19% respectively, making Indian products relatively less competitive in the US market. This imbalance, if unaddressed, could erode India’s long-standing position as a key supplier to the US.
Trade Rerouting Risks
We are also concerned about the possibility of trade rerouting through low-tariff destinations such as Mexico, Canada, Turkey, UAE, or Oman—undermining the spirit of legitimate trade and impacting transparency.
Industry Resilience
Despite these challenges, the Indian gem and jewellery industry remains resilient. The recent success of IIJS Premiere 2025, the world’s largest jewellery fair, was a testament to strong domestic demand, with projected business ranging from ₹70,000 crore to ₹1 lakh crore. The domestic market—currently pegged at $85 billion—is expected to grow to ₹130 billion in the next two years. This domestic growth offers some cushion, particularly for the diamond sector.
Market Diversification Efforts
Simultaneously, GJEPC is actively exploring new markets. The upcoming Saudi Arabia Jewellery Exhibition (SAJEX) is one such initiative aimed at opening fresh avenues in emerging regions and diversifying India’s export destinations.
Government Appeal
While we understand that no trade talks can happen in the current scenario, we urge the Government for immediate relief. We appeal for policy reforms and extensive support to aid the industry in these extraordinarily challenging times.
Solidarity with Government
As a responsible industry and as citizens of this nation, we are respectfully aligned and stand in solidarity with the Government of India. In these testing times, we remain committed to protecting the integrity of our trade and upholding the nation’s economic interests with unity and resolve.
Relief sought from the Government of India
Duty Drawback Scheme: The Government of India may introduce a targeted scheme on the lines of Duty Drawback or reimbursement scheme, covering approximately 25–50% of the new tariffs imposed on gems and jewellery exports only to the USA from August to December 2025. This initiative aims to partially offset the impact of the new tariff structure, mitigate financial strain on exporters, reduce the risk of order cancellations, and help maintain India’s market share in an increasingly competitive and price-sensitive global market.
Financial Support for Market Diversification: Financial assistance under the MAI Scheme is proposed to support the exploration of new markets beyond the traditional U.S. focus. This includes backing for the upcoming SAJEX jewellery exhibition, scheduled from 11th to 13th September 2025 in Jeddah, as well as the establishment of an India Jewellery Exposition Centre in Saudi Arabia, modelled on the IJEX-Dubai platform.
Deferment of Interest on Working Capital Facilities: In respect of working capital facilities sanctioned, lending institutions may be permitted to allow a deferment of interest of six months, from 1st August 2025 to 1st January 2026, as was done during the COVID-19 period.
Allowance of reverse job work by units located in SEZs: By allowing reverse job work to SEZ, the SEZ units would be able to utilise their machinery and engage their labour for manufacture and supply of jewellery in the DTA which can be a saviour during this crisis. The duty should be on the value of duty foregone on the duty-free inputs used by the SEZ unit in manufacturing jewellery for DTA.
Allowing DTA sales: Cancellation of orders will cause blockage of working capital and may result in unit becoming NPA, it is suggested that the SEZ unit may offload their existing stock/pipeline to the domestic market. This sale to DTA should be on duty foregone on the duty-free inputs used in manufacturing of jewellery. Permitting SEZ for reverse job work and DTA sales will support the SEZ to support and retain its workers/artisans/cutters (around 1.25 lakh) and survive at the threshold level amid this emergence situation.
Pre-Shipment Finance Relief: Given potential shipment delays, banks should be encouraged to extend pre-shipment loan due dates by at least 90 days without penalties.
Interest Equalisation Scheme: The interest equalisation scheme has served an important purpose as it has provided much-needed competitiveness to Indian exports, particularly to MSMEs, as the interest costs in India is much above that in competitor countries. The interest subvention scheme may be re-introduced to provide the much-needed financial support to the exporters.
Relief / Liquidity Packages: Similar to the concessional Covid-era loans, Govt/RBI could introduce special short term Relief packages /measures for the sector.
Credit Rating to gems and jewellery sector: Ensuring ratings remain stable for the G&J sector by the rating agency. It is requested to ensure that rating agency should not downgrade the rating of the G&J sector amid the slowdown of businesses which is obvious due to this sudden imposition of high tariffs.
About The Gem and Jewellery Export Promotion Council (GJEPC)
The Gem & Jewellery Export Promotion Council (GJEPC), set up by the Ministry of Commerce, Government of India (GoI) in 1966, is one of several Export Promotion Councils (EPCs) launched by the Indian Government, to boost the country’s export thrust, when India’s post-Independence economy began making forays in the international markets. Since 1998, the GJEPC has been granted autonomous status. The GJEPC is the apex body of the gems & jewellery industry and today represents over 10,700 members in the sector. With headquarters in Mumbai, GJEPC has Regional Offices in New Delhi, Kolkata, Chennai, Surat and Jaipur, all of which are major centres for the industry. It thus has a wide reach and is able to have a closer interaction with members to serve them in a direct and more meaningful manner. Over the past decades, GJEPC has emerged as one of the most active EPCs and has continuously strived to both expand its reach and depth in its promotional activities as well as widen and increase services to its members.
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