US Tariff Decision Rattles Indian Gems and Jewellery Industry

US President Donald Trump's announcement to double tariffs on Indian imports to 50% has sent shockwaves through the Indian gem and jewellery sector. Industry leaders are now exploring the establishment of manufacturing units in countries with lower tariffs, such as the UAE and Mexico, to sustain their exports to the US market.

Industry Leaders Voice Concerns and Seek Alternatives

Kirit Bhansali, Chairman of the Gem & Jewellery Export Promotion Council (GJEPC), described the move as a "doomsday" for the sector. "We will reroute our products through other countries after studying their tariff structures with the US. Setting up manufacturing units there is our priority," Bhansali stated.

Highlighting potential strategies, Bhansali mentioned Dubai as a nearby option and Mexico for studded jewellery, ensuring all actions remain within legal boundaries.

Comparative Tariff Rates and Market Impact

The United Arab Emirates enjoys a mere 10% tariff, while Mexico faces a 25% duty, both significantly lower than India's new 50% rate. The US, being India's largest market for polished diamonds and studded jewellery, accounts for $10-billion in trade as of 2024-25.

Titan Company, a leading Indian jeweller, is reportedly considering shifting some manufacturing to the Middle East to navigate the tariff hike.

Immediate Effects and Future Negotiations

Current shipments remain unaffected, but future exports are at risk. "Orders from the US have halted, with only pre-August 7 shipments underway," noted Adil Kotwal of the SEEPZ Gems and Jewellery Manufacturers Association.

A US delegation is expected to visit India to discuss the tariff issue, offering a glimmer of hope for resolution.