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Key Points

US tariffs threaten India’s polished diamond exports, already down 17% this fiscal. Crisil predicts a further 20-25% revenue drop as polishers struggle with thin margins. Competition from lab-grown diamonds and China’s sluggish demand worsen the crisis. However, India’s new FTAs could help offset long-term trade losses.

Key Points: US Tariffs Slash Indian Polished Diamond Exports by 25%

  • US tariffs drop India’s diamond export share from 37% to 24%
  • Thin 4-5% margins limit polishers’ ability to absorb costs
  • China’s weak demand and lab-grown diamonds add pressure
  • FTAs with UK, UAE may soften long-term trade blow
2 min read

Indian polished diamond exports to US face fresh hurdles amid tariffs, say Crisil officials

Crisil warns US tariffs could cut India’s polished diamond exports by 20-25%, with demand already falling amid competition from lab-grown gems.

"Natural diamond polishers, operating at thin 4-5% margins, can’t absorb tariff shocks alone. – Himank Sharma, Crisil Ratings"

New Delhi, August 3

Exports of Indian natural polished diamonds to the US - contributing 35 per cent of total exports in fiscal 2025 - is set to face further headwinds following the tariffs and penalty announced by the US, said Crisil Ratings officials.

An official of the ratings agency noted that the demand for natural diamonds in the US market has slowed already.

"Added to this, reduced offtake by retailers post announcement of 10 per cent tariff on Indian exports in April 2025, brought down the share of the US in polished diamond exports to 24 per cent in the first quarter of this fiscal from 37 per cent for the same period last fiscal," said Rahul Guha, Senior Director at Crisil Ratings.

"In the milieu, the revenue of Indian diamond polishers can decrease a further 20-25 per cent this fiscal to USD 10-11 billion," Guha added.

Himank Sharma, Director, Crisil Ratings, said, "Natural diamond polishers, traditionally operating at thin margins of 4-5 per cent, will have limited ability to absorb the tariff-induced price rise. As a result, miners and retailers may need to step in to absorb some of the price shocks."

In fiscal 2025, the export volumes of natural diamonds remained constrained by lower demand from China and competition from LGD in the US. Although polishers pushed sales in the fourth quarter to avoid tariffs, and price erosion was limited, revenues from natural diamond exports fell 17 per cent to USD 13.3 billion.

India is the top global exporter of diamonds and the largest consumer of gold.

Stakeholders of the Indian Gems and Jewellery sector expressed deep concern, warning of short-term disruptions, potential job losses, and rising prices for American consumers following the US announcement of a 25 per cent tariff on India, which was announced by US President Donald Trump on July 30. Trump also said India will face additional penalties for purchasing oil from Russia.

However, business leaders also pointed to India's expanding trade ties, including recent Free Trade Agreements (FTAs) with the UK, Australia, and the UAE, as a buffer against the fallout, suggesting the long-term impact may hurt the US more than India.

- ANI

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Reader Comments

S
Sarah B
As someone in the jewelry business, I've seen firsthand how these tariffs are affecting prices. American customers don't realize they'll ultimately pay more for their diamond rings. Maybe time to focus more on domestic and Middle Eastern markets?
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Arjun K
Trump is playing dirty politics again! First oil, now diamonds. But our FTAs with UK and UAE show we're not dependent on just one market. Indian businesses are resilient - we'll find new opportunities ✊
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Priya S
The 4-5% margin figure is shocking! Our diamond workers deserve better. Maybe this crisis will push the industry to modernize and focus more on value-added products rather than just polishing.
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Michael C
While I understand the concerns, perhaps this is an opportunity for India to develop its own luxury jewelry brands instead of just being a processing hub. The craftsmanship is world-class but branding needs work.
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Kavya N
My uncle works in Surat's diamond industry. They're already doing 3-day weeks because of lower orders. Government should provide some relief package for workers if job losses happen 😔
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Vikram M
The article misses how China's slowdown is also hurting exports. We need to diversify beyond just US and China markets. Middle East and domestic consumption could be growth areas

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