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Glittering Industry, Growing Shadows
India’s diamond sector, especially the bustling city of Surat, has long been the sparkling jewel of the country’s export economy. With nearly 90% of the world’s diamonds being cut and polished in India, the industry supports millions—directly and indirectly—ranging from skilled artisans to traders and retailers worldwide.
However, the recent decision by the United States to double tariffs on Indian imports to 50% has unleashed a set of unprecedented challenges for this glittering industry, threatening not only its global dominance but also the survival of thousands of jobs and livelihoods.
The Heart of the Industry: Surat and Its Legacy
Surat, often called the diamond capital of India, is home to thousands of small and medium-scale units specializing in diamond cutting and polishing. Its name is synonymous with craftsmanship, excellence, and a global business network reaching across continents, including the vital American market.
For decades, Surat’s diamond industry flourished by leveraging skilled labor, deep expertise, and strategic positioning in global supply chains. Nearly $10 billion in gems and jewelry flowed out of this region annually, with close to 30% of exports destined for the United States—making the American market a critical lifeline.
What Changed: The US’s Doubling of Tariffs
In April 2025, the Trump administration initially introduced a 25% tariff on Indian goods, targeting sectors including gems and jewelry. But this summer, the tariff doubled to 50%, citing India’s continued purchases of Russian crude oil and other geopolitical reasons as justification.
The sudden jump was like a shockwave to businesses unprepared for such a steep cost increase. This tariff effectively raised the landed price of Indian diamonds in the US by a significant margin, putting them at a clear disadvantage compared to competitors from other countries facing lower or no tariffs.
Immediate Consequences on Exports and Operations
Factories in Surat have reported a dramatic slowdown. Shipments previously scheduled to reach US customers have been delayed or canceled altogether. Exporters and traders recount tales of missed deadlines, canceled contracts, and piled-up inventory.
One diamond polishing unit owner shared that monthly output has plummeted by nearly 85%, with only a fraction of the workforce retained. Many skilled workers face unpaid leave or layoffs as businesses scramble to stay afloat amid diminished demand.
At workshops across Surat, silent machines and empty tables tell an unsettling story of an industry choking under tariff-induced pressure.
The Ripple Effect on Jobs and Livelihoods
The diamond industry in Surat employs millions of workers—both skilled artisans and unskilled laborers—who depend on continuous orders to support their families. The tariffs put these livelihoods at risk.
Contract workers have reportedly faced wage cuts, delayed payments, or outright job losses. Labor union leaders note a growing sense of uncertainty and anxiety across the city, with many families fearing a difficult future if the tariff situation persists.
Industry Leaders and Their Perspectives
Trade bodies like the Gem and Jewellery Export Promotion Council (GJEPC) recognize the tariffs’ devastating impact. However, they remain cautiously optimistic, pointing out that India’s diamond industry enjoys unmatched craftsmanship and that no other country can easily fill its place in the global market.
Industry leaders champion the idea that this hardship, while severe, is not permanent. They call for government intervention in the form of targeted subsidies, duty drawbacks, and expedited trade negotiations with other nations to diversify export destinations.
The Broader Economic Context
India’s diamond sector does not operate in isolation. It forms a critical part of the country’s overall export ecosystem, heavily intertwined with ancillary industries like cutting tools, polishing machinery, gem grading labs, and jewelry design studios.
When tariffs increase sharply, the shocks multiply along this chain, affecting technology providers, transportation, marketing, and financing—all integral to the diamond business. The doubling of tariffs, therefore, disrupts this complex network, straining multiple sectors and economic stakeholders.
Competition and Market Shifts
With India disadvantaged by the high tariffs, competitors like Belgium, China, Dubai, and even emerging centers such as Russia could benefit by serving the US market with lower-priced polished diamonds.
However, industry experts caution that none of these can match the scale, quality, and reliability of India’s diamond processing capabilities. Although alternatives exist, the significant shift could spell long-term damage for Indian exporters, shrinking their global footprint.
Government Support and Policy Measures
The government has begun responding with relief measures, including suspending import duties on raw materials and advocating aggressively for new trade pacts with the UK, Australia, and the EU.
Trade delegations seek to open fresh markets and cushion losses caused by the US tariffs. Meanwhile, talks continue with US officials to explore tariff reduction or exemptions, highlighting India’s importance as a strategic supplier and partner.
Innovation and Future Readiness
For the diamond capital to bounce back, innovation is key. Leaders push for digital transformation in the industry, introducing blockchain for supply chain transparency, sophisticated grading and certification technologies, and marketing strategies that emphasize ethical sourcing and sustainability.
Developing new products, including lab-grown diamonds, and expanding artisanal jewelry exports offer avenues for growth that may help offset tariff pressures.
The Human Spirit Behind the Sparkle
Amid the economic discourse, it is vital not to lose sight of the human stories. Skilled cutters who have inherited centuries-old family traditions, young entrepreneurs innovating in design, and countless workers investing hope and effort daily—all represent the spirit behind India’s diamond industry.
Their resilience and hope, even in the face of adversity, underscore the deep connections between culture, community, and commerce.
Conclusion: At a Crossroads, Yet Shining Bright
India’s diamond industry stands at a critical junction. The doubling of US tariffs undeniably casts a very real shadow over its glittering future, threatening jobs, exports, and global market share. However, the industry’s unparalleled capabilities, supportive government action, and relentless spirit provide a foundation for hope and recovery.
This moment demands resilience, strategic adaptation, and unity—not just to survive but to emerge stronger. India’s diamond industry, shining for generations, is poised to withstand this challenge and continue sparkling on the world stage.
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