The US government’s decision to impose a 26% reciprocal tariff on Indian imports is expected to have a significant impact on India’s gems and jewellery sector. This move, announced by President Donald Trump, aims to address trade imbalances by matching India’s tariffs on US goods.
In the financial year 2024, gems and jewellery accounted for 12.8% of India’s exports to the US, totaling $9.9 billion. The new tariff, effective from April 5, will be added to a baseline tariff of 10% on all imports.
The gems and jewellery trade is crucial for India, with cut and polished diamonds making up 57% of these exports to the US, followed by studded-gold jewellery at 27%. Other products like silver jewellery, lab-grown diamonds, and plain gold jewellery also contribute, albeit to a lesser extent.
Experts warn that the tariffs could bring the trade to a standstill as US importers reassess their orders from Indian exporters. Kirit Bhansali, Chairman of the Gem and Jewellery Export Promotion Council, noted that while gold and diamond jewellery are seen as investments in India, they are considered luxury items in the US, where demand may decline if prices rise.
Major exporters such as Goldiam International, Vaibhav Global, and Rajesh Exports are expected to be heavily impacted. However, companies with lower dependence on US exports, like Kalyan Jewellers and Titan, may face less disruption.
The tariffs are also likely to affect domestic demand due to surging gold prices amid global uncertainty. Shares of affected companies have already shown significant declines in response to the news.
President Trump has exempted sectors like pharmaceuticals and semiconductors from these tariffs, with sector-specific tariffs to be announced later. The move is part of a broader trade strategy aimed at reducing the US trade deficit.
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