The diamond market in Gujarat, particularly in Surat, faces a severe crisis due to new tariffs imposed by the United States. President Donald Trump announced a 50% tariff on diamonds from India. Previously, he had set a 25% tariff, but this latest move has raised concerns among local traders.
Surat is known as one of the world’s largest diamond hubs. In 2024, India exported $9.23 billion worth of diamonds and jewellery to the United States, while only $941 million went to the UK. Nearly 28% of diamond imports in the US come from Israel, which is facing a lower tariff of only 19%.
The new tariffs have forced many diamond companies in Surat to cancel orders for Christmas, which is a crucial time for sales. This season accounts for nearly half of the annual revenue in international markets. Experts say that exports to the US have already dropped by 25% in recent years, and production has decreased by 30-35% in factories.
If the current trend continues, further reductions in exports are expected with the new tariffs. This situation could lead to significant economic losses for the country. The export of cut and polished diamonds has already fallen from $9.86 billion in 2021-22 to an anticipated $4.81 billion by 2024-25.
The high tariffs could also lead to the loss of over 100,000 jobs in the diamond industry, which employs millions in cutting, polishing, and jewellery making. The impact will be felt especially hard in Gujarat, Rajasthan, and Maharashtra.
Many companies are now worried about their future. For instance, Dharmanandan Diamonds, one of the major players in Surat, has already seen a drop in exports due to geopolitical tensions. Their director, Hitesh Patel, noted that they have been closely monitoring the situation since the announcement of the tariffs.
Industry experts, including Kirit Bhansali, president of the Gems and Jewellery Export Promotion Council (GJEPC), expressed concerns that the sudden hike in tariffs could threaten market share, lead to order cancellations, and affect jobs and small businesses in the sector.
The diamond industry in Surat comprises around 5,000 factories and employs over six lakh people. Most of these workers are skilled labourers from Saurashtra. The entire economy of the region revolves around this industry, making the potential job losses alarming.
Although the US has raised tariffs, the UK has recently removed duties on diamonds and jewellery imported from India. This change could offer a potential market for Gujarat’s diamond traders, especially as they seek new avenues to mitigate losses.
In summary, the new tariffs imposed by the US have thrown Gujarat’s diamond market into uncertainty. With the holiday season approaching, traders are anxious about the future of their businesses and the livelihoods of thousands who depend on this industry.