Fri, Feb 06, 2026
Diamond Industry Eyes Market Diversification As FTA, Reduced Tariffs Bring Relief To Traders
The US tariff cut will allow diamond exporters to offer products at more competitive prices, helping them regain new orders. This will strengthen medium-term growth and employment
Feb 06, 2026 · 3 min read
The gems and jewellery sector recorded losses worth $3.05 billion after the Trump administration imposed 50% punitive tariffs on Indian goods last year. Diamond traders across the country, particularly in Mumbai and Surat, were gripped by the whopping US tariffs, denting profits and prospects of global trade. However, the industry has now rebounded, courtesy of the recently announced India-US trade deal and the free trade agreement (FTA) with the EU, which has renewed optimism among the diamond traders, who have now gained access to larger markets.
According to an Institutional Equities report, the US tariff cut will allow diamond exporters to offer products at more competitive prices, helping them regain new orders. This will strengthen medium-term growth and employment.
Excessive tariffs had created a serious employment crisis for lakhs of workers in Surat’s diamond polishing units. Industry margins were under severe pressure, and cash flows had dried up. With [US] tariffs now reduced to 18%, fresh energy will flow into the diamond industry
— Dinesh Navadiya, Chairman, Indian Diamond Institute, Katargam
The US is the largest market for India’s gems and jewellery sector, accounting for nearly 30% of the total exports. The sector contributes to significant employment generation. For instance, around one million artisans are currently employed in Surat’s diamond factories.
After the US imposed an initial 25% tariff, followed by an additional 25%, the gems and jewellery exports to the US fell sharply by 44.4% (from $6.95 billion to $3.86 billion during April–December 2025).
The tariff reduction will increase foreign exchange inflows and ensure economic prosperity reaches diamond artisans
— Dhirubhai Savani, Secretary, Surat Diamond Association (SDA)
The reduction in the tariff rates to 18% is widely seen as a "booster dose" for the sector. Reacting to the trade deal, Gujarat Chief Minister Bhupendra Patel had said that "a new chapter has begun in the progress of bilateral relations between India and the US."
Demand for natural demands is also set to rise in tandem with lab-grown diamonds.
The tariff reduction will create significant employment opportunities, particularly in low-value CVD [Chemical Vapour Deposition] and HPHT [High Pressure High Temperature] diamond segments
— Shantibhai Dhanani, Treasurer, Diamond Association
India’s diamond industry primarily depends on markets in the US, Europe, and the Far East (China). In recent times, Chinese consumers shifted from diamonds to gold, impacting the Indian diamond industry. In such circumstances, European and American markets became critically important.
With the India–EU FTA, India has reached parity with countries such as China and Thailand, which enjoy zero-duty access to European markets. In 2024, India’s gems and jewellery exports [to the EU] stood at $30 billion. The FTA is expected to give new momentum to sectoral diversification.
Surat Diamond Bourse
Meanwhile, the Surat Diamond Bourse, which is spread across 1.7 million square feet and constructed at a cost of ₹3,400 crore, is set to give a major fillip to the diamond traders once it becomes fully operational. The complex consists of nine towers, offering over 4,200 offices. Built over 682 hectares at Khajod near Magdalla in Surat, the diamond bourse is envisioned as a one-stop hub for traders, artisans, industrialists, buyers, exporters, and related agencies. With revived hope for the industry and a slew of trade deals, the bourse would also play an integral role in the long run boosting the diamonds trade.
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