India’s diamond industry is grappling with significant challenges as exports to the United States have declined by over 50% in the first half of the 2025–26 fiscal year. This downturn is attributed to newly imposed U.S. tariffs and weakening demand, particularly affecting smaller companies. Conversely, exports to the United Arab Emirates (UAE) and the United Kingdom (UK) have experienced substantial growth, offering a glimmer of hope for the sector.
The U.S. has implemented a 50% tariff on all Indian shipments, effective from August 27, 2025. This policy change has led to a sharp decline in India’s exports to the U.S., which traditionally accounts for over 30% of the country’s diamond exports. According to the Gem and Jewellery Export Promotion Council (GJEPC), exports to the U.S. fell by 40.28% to $2.77 billion between April and September 2025, with cut and polished diamond exports dropping by 53.62% to $1.18 billion. The tariffs have not only increased costs but have also eroded buyer confidence, particularly among smaller exporters who lack the resources to absorb such significant price hikes. Surat, known as the world’s diamond capital, has witnessed a slowdown in activity, with many processing units operating below capacity.
In response to the challenges posed by the U.S. tariffs, Indian exporters have successfully diversified their markets. Exports to the UAE surged by 65.23% to $1.29 billion, driven by increased demand for both plain and studded gold jewellery. Similarly, exports to the UK grew by 17.01%, bolstered by trade agreements that aim to eliminate tariffs on most Indian exports. The GJEPC has been actively coordinating with the Indian government to support the industry through these turbulent times, emphasizing the importance of exploring new markets and strengthening existing trade relationships to mitigate the impact of the U.S. tariffs.
Despite the setbacks in the U.S. market, the overall gem and jewellery exports from India have shown resilience. For the first half of the 2025–26 fiscal year, exports increased by 3.66% to $14.09 billion, compared to $13.60 billion during the same period last year. This growth is attributed to the strong performance in alternative markets and the upcoming festive and wedding seasons, which are expected to drive further demand.
However, industry experts caution that the long-term outlook remains uncertain. The U.S. tariffs have introduced a new layer of complexity, and competition from lab-grown diamonds continues to intensify. The GJEPC projects a 17–20% decline in cut and polished diamond exports for the 2025–26 fiscal year, underscoring the need for strategic adaptations in the face of evolving global trade dynamics.
India’s diamond industry stands at a crossroads, facing significant challenges in its traditional markets while finding new opportunities in emerging ones. The ability to adapt to shifting global trade policies and consumer preferences will be crucial in determining the sector’s future trajectory. As the industry navigates these turbulent waters, the resilience and adaptability of Indian exporters will be key to maintaining the country’s position as a global leader in the diamond trade.
