Will Trump’s India tariffs shut down world’s biggest cut diamond supplier?

For Kalpesh Patel, Diwali, the festival of lights celebrated crossed India, mightiness good people lights retired for his eight-year-old diamond cutting and polishing unit.

The 35-year-old employs astir 40 workers who alteration unsmooth diamonds into perfectly polished gems for exports astatine the tiny mill successful Surat, a metropolis located successful the occidental Indian authorities of Gujarat.

His concern has survived aggregate velocity bumps successful caller years. But United States President Donald Trump’s mammoth 50 percent tariffs connected imports from India mightiness beryllium the last nail successful the coffin for his unit, portion of an already struggling earthy diamond industry, helium said.

“We inactive person immoderate orders for Diwali and volition effort to implicit them,” helium told Al Jazeera.

Diwali, arguably India’s azygous biggest festival, scheduled for precocious October this year, usually sees home income of astir goods soar. “But we mightiness person to unopen the concern adjacent earlier the festival, arsenic exporters mightiness cancel the orders owed to precocious tariffs successful the US,” Patesh said.

“It is becoming progressively hard to wage the salaries and support different expenses with falling orders.”

He is among the 20,000-odd tiny and mean traders successful Surat, known arsenic the “Diamond City of India”, which unneurotic chopped and polish 14 retired of each 15 earthy diamonds produced globally.

The US is their azygous largest export market. According to the Gem and Jewellery Export Promotion Council (GJEPC), India’s apex assemblage for the industry, the state exported chopped and polished gems worthy $4.8bn to the US successful the 2024-25 fiscal year, which ended successful March. That is much than one-third of India’s full exports of chopped and polished diamonds, astatine $13.2bn implicit the aforesaid period.

Dimpal Shah, a Kolkata-based diamond exporter, told Al Jazeera that orders person already started getting cancelled. “Buyers successful the US are refusing to offload the shipped products, citing precocious tariffs. This is the worst signifier of my two-decade-old vocation successful diamonds.”

Kalpesh Patel, who runs a diamond cutting and polishing concern successful Surat, Gujarat, fears that helium whitethorn not beryllium capable to proceed his concern for long, due to the fact that of US tariffs connected Indian imports [Photo courtesy of Kalpesh Patel]

US imposes penalty

A 25 percent reciprocal tariff connected each Indian goods, which Trump announced connected April 2, came into effect connected August 7, aft talks betwixt the two countries failed to output a commercialized woody by then. Negotiations are continuing.

Meanwhile, connected August 6, Trump announced an further 25 percent tariff, taking the full tariff complaint to 50 percent. He termed the further tariff that would travel into effect from August 27 arsenic a punishment for India’s continued buying of Russian oil, arsenic the US president tries to propulsion Moscow into accepting a ceasefire successful Ukraine.

For the gems industry, which already faced a pre-existing 2.1 percent tariff, the effectual tariff present amounts to 52.1 percent.

Ajay Srivastava, the laminitis of Global Research Trade Initiative (GTRI), a commercialized probe group, termed the Trump government’s further hike arsenic an enactment of “hypocrisy”, citing however the US itself continues to commercialized with Russia, and however China – Russia’s biggest lipid purchaser – faces nary akin penalty.

“Trump is targeting India retired of vexation arsenic it refused to toed the US enactment connected the Russia-Ukraine conflict, and for its refusal to unfastened its agriculture and dairy sector,” helium added, referring to broader ongoing commercialized talks and differences implicit US demands for greater entree to captious Indian economical sectors.

Yet, immoderate the reasons for Trump’s tariffs, they are hurting a diamond manufacture already bleeding from aggregate hits.

India supplies astir each of the world’s chopped and polished diamonds, produced successful tiny units crossed the authorities of Gujarat [Photo courtesy Ramesh Zilriya, president of the state’s Diamond Workers Association]

Diamond assemblage severely hit

More than 2 cardinal radical are employed successful diamond polishing and cutting units successful Surat, Ahmedabad and Rajkot cities successful Gujarat — and galore person already suffered wage cuts successful caller years, archetypal due to the fact that of the COVID-19 pandemic, and past Russia’s full-scale penetration of Ukraine.

“The pandemic led to economical slowdown affecting the planetary markets successful Hong Kong and China,” Ramesh Zilriya, the president of Gujarat’s Diamond Workers Union, told Al Jazeera. The “Western prohibition connected rough diamond imports from Russia owed to the Russia-Ukraine warfare and the G7 prohibition connected Russia besides affected our business”, helium added.

Russia has historically been a large root of earthy diamonds.

Zilriya claimed that 80 diamond workers person died by termination implicit the past 2 years due to the fact that of this economical crisis.

“The concern successful the planetary marketplace led to the wages of the workers getting halved to astir 15,000-17,000 rupees ($194) per month, which made endurance hard successful the look of rising inflation,” helium said.

Once the Trump tariffs afloat footwear in, Zilriya fears that up to 200,000 radical successful Gujarat whitethorn suffer their livelihoods.

Already, much than 120,000 erstwhile diamond assemblage workers person applied for benefits. A 13,500-rupee ($154) allowance per child, to enactment their families, was promised successful May by the authorities authorities to those who person mislaid jobs owed to the tumult successful the assemblage successful caller years.

But the tariffs, pandemic and warfare are not unsocial to blasted for the crisis: Lab-grown diamonds are besides dilatory eating into the marketplace of their earthy counterparts.

“Unlike earthy [diamonds], the lab-grown diamonds are not mined but manufactured successful specialised laboratories and priced astatine conscionable 10 percent of the earthy ones. It is hard adjacent for a seasoned jeweller to place the earthy and lab-grown with a bare eye. The sensation of consumers is present shifting to lab-grown [diamonds], arsenic they are cheap,” said Salim Daginawala, the president of the Surat Jewellers Association.

A idiosyncratic checks the polishing of a lab-grown diamond  successful Surat, India, Monday, February 5, 2024 [Ajit Solanki/AP Photo]

Decline successful exports

In the 2024-25 fiscal year, India imported unsmooth diamonds worthy $10.8bn, marking a 24.27 percent diminution from the $14bn imported successful 2023-24, arsenic per the statistic by the GJEPC.

The exports of chopped and polished earthy diamonds likewise witnessed a 16.75 percent decline, with exports declining to $13.2bn successful 2024-25 arsenic compared with $16bn successful the preceding year.

“This determination [the tariffs] would person far-reaching repercussions connected the Indian system that mightiness disrupt captious proviso chains, stalling exports and threatening thousands of livelihoods. We anticipation to get a favourable simplification successful tariffs; otherwise, it would beryllium hard to survive,” said Kirit Bhansali, the president of the GJEPC.

The tariffs could besides wounded US jewellers, warned Rajesh Rokde, the president of the All India Gems and Jewellery Domestic Council (GJC), a nationalist commercialized federation for the industry.

“The US has astir 70,000 jewellers who would besides look a situation if the jewellery becomes expensive,” Rokde added.

A salesperson shows a diamond ringing to a prospective purchaser astatine a jewellery store successful Ahmedabad, India, connected April 14, 2025 [Ajit Solanki/AP Photo]

A home solution?

Traders accidental that the request of the hr is to summation home request for diamonds and diversify to caller markets.

A stronger home marketplace “would not lone lend to the section economy, but would besides make jobs for respective thousands of people”, said Radha Krishna Agrawal, the manager of Narayan das Saraf Jewellers successful Varanasi city, successful the bluish authorities of Uttar Pradesh.

The tariffs, helium said, could beryllium a “blessing successful disguise” if they extremity up reducing the dependence of India’s gems manufacture “on different countries”.

Bhansali said that the home gems and jewellery marketplace was growing, and expected to scope $130bn successful the adjacent 2 years, up from $85bn astatine the moment. The manufacture is besides looking for caller markets, including Latin America and the Middle East.

Gold already offers an illustration of a beardown home market, cushioning the interaction of hits connected exports, said Amit Korat, the president of the Surat Jewellery Manufacturers Association.

But for now, the diamond assemblage successful India has nary specified shield. It needs to beryllium saved, urgently, said Patel, the Surat concern proprietor connected the cusp of shutting down his polishing and cutting unit.

Without help, helium said, “the concern volition suffer its radiance forever”.