Indian diamond cutting hub risks moving abroad as 50% US tariff bites

Surat | Gujarat —— A deafening silence has replaced the rhythmic whir of emery wheels in Surat, the heart of India’s diamond cutting and polishing industry. A “tsunami” in the form of a 50% tariff imposed by the United States is threatening to undo over six decades of economic prosperity and skilled craftsmanship, leaving thousands of workers facing an uncertain future. Once a sleepy town in the 1960s, Surat became a global diamond hub after the Indian government liberalized the import and export of gems, a move that capitalized on its low-cost labor and burgeoning workforce. Today, that legacy is under threat.

“The 50% tariff on polished diamonds is like a tsunami and we have to pack our bags in search of the countries where the tariffs are on the lower side,” said a leading diamond company owner who requested anonymity, highlighting the grim reality facing the industry. With about 40% of India’s polished diamond exports going to the US annually, the new tariff is an existential threat.

Industry sources said that the Indian diamantaires have trade offices in important destinations like Antwerp, Tel Aviv, Dubai, Saudi Arabia, Hong Kong, Japan, Botswana, Zimbabwe etc. The 50% tariff on the diamonds manufactured in India will have  a ripple effect as only India has the skill to manufacture small diamonds, which are in huge demand in the US. 

The unique skill set of Surat’s artisans, passed down through generations, is a major concern. India’s workers are renowned for their ability to cut and polish small diamonds, a niche market that is in high demand in the US. Aniruddha Lidbide, a diamond trade analyst, warned of dire consequences if the tariff becomes permanent. “There will be massive job losses in the industry, especially in Surat after February 2026,” he said, adding that many small and medium diamond units have already ceased operations.

Mehul Shah, vice-president of Bharat Diamond Bourse (BDB) said, “The 50% tariff on diamonds by the US is going to shut the Indian diamond industry, because about 40% of the goods are destined for the US. Obviously, many have started thinking to shift their manufacturing base from India, and if this happens then they are not going to come back” 

Piyush Patel, director of Dharmanandan Diamonds said that the 50% US tariff is something which is like a bloodbath for the Indian diamond industry. In the last three weeks, the diamond exports from our company to the US has reduced by almost 90%. The November-December orders are on hold. Definitely it is a big impact and we hope that both the government should find a way out and bring it below 10%. 

On the alternate planning,  Patel said, “India’s domestic consumption for diamonds has increased in the last couple of years, but it is not like the US. Now, we are looking at Far East, Middle East, UK, and India as our potential market for diamond marketing”

Industry sources said that the talks on the reciprocal US tariff on India were going on since April-2025. In July, there was 25% duty and it has now increased to 50%. However, the diamantaires in India were all prepared for the tariff and they started fulfilling most of the orders from the US beforehand. There is not an issue for the upcoming Christmas season as the US traders have enough stock. But, the real problem will start from February 2026 for the Indian diamond industry. 

Mehul Shah, VP of BDB said, “There is a huge impact of 50% US tariff on the jewellery factories located in Mumbai’s Santacruz Electronic Export Processing Zone (SEEPZ). Almost half of the jewellery manufactured in SEEPZ is exported to the US. There are 1 lakh workers in the SEEPZ. It is our long pending demand that the goods manufactured in SEEPZ should be allowed to be sold in the Domestic Tariff Area (DTA). We want the Central Government to relax norms to save the jobs of 1 lakh workers”

Sabhyasachi Ray, executive director of the Gems and Jewellery Export Promotion Council (GJEPC) said, “We have two immediate demands: allow DTA sales of the goods manufactured in SEEPZ and the six month  interest moratorium to the diamond companies who have borrowed loans from the banks for the raw material. Due to the US tariff, the orders have stalled and the companies are experiencing heavy losses”.