India’s diamond industry, which produces 14 out of every 15 cut diamonds globally, faces significant challenges as new 50 percent tariffs on exports to the United States take effect.
For Kalpesh Patel, owner of a diamond cutting and polishing unit in Surat, Gujarat, the upcoming Diwali season — typically a period of strong sales — could instead mark the closure of his eight-year-old business. Employing around 40 workers, Patel’s factory processes rough diamonds into polished gems for export.
Surat, often called the “Diamond City of India,” is home to about 20,000 small and medium traders in the sector, employing over 2 million people across Gujarat. The US is the largest export destination for Indian diamonds, accounting for more than one-third of India’s total cut and polished diamond exports, which reached $13.2 billion in the 2024-25 financial year.
Industry representatives say the higher tariffs, combined with existing market pressures, are prompting order cancellations. Kolkata-based exporter Dimpal Shah noted that US buyers are refusing shipments due to increased costs.
The diamond industry has faced several recent challenges, including the pandemic’s economic slowdown and changing consumer preferences. The growing popularity of lab-grown diamonds — which can be up to 90 percent cheaper than natural stones — has further shifted demand.
According to the Gem and Jewellery Export Promotion Council (GJEPC), India’s imports of rough diamonds fell by 24.27 percent in 2024-25, while exports of cut and polished diamonds declined by 16.75 percent.
Kirit Bhansali, GJEPC chairman, warned that the tariffs could disrupt supply chains, affect exports, and threaten thousands of livelihoods. Domestic industry leaders also caution that higher prices may impact around 70,000 jewellers in the US.
Some see potential for opportunity in boosting domestic demand and expanding into new markets, such as Latin America and the Middle East. The domestic gems and jewellery market is projected to grow from $85 billion to $130 billion within two years.
For Patel and many others in Surat, however, the immediate concern is keeping their businesses afloat. Without relief from the tariffs or stronger local demand, industry leaders fear a long-term decline in one of India’s most significant export sectors.
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