India's gems and jewellery sector heaved a temporary sigh of relief after US President Donald Trump suspended a punishing tariff hike that had threatened to cripple a multi-billion dollar export industry and jeopardise tens of thousands of jobs.
Across India's manufacturing and processing centres, concern had spread rapidly over how exporters would endure Trump’s 26 percent tariff on a vital industry. The impending duty increase cast a long shadow over business in Mumbai’s key export zones, with exports ranging from silver ornaments to polished diamonds verging on a near standstill, industry officials informed the foreign news agency.
Chairman of India's Gem and Jewellery Export Promotion Council, Kirit Bhansali, described Trump’s 90-day suspension as a "much-needed breather" for exporters.
"This window will help us realign and strengthen our position in the market," Bhansali stated.
He remarked that the pause would enable the sector to "stabilise operations and strategise for the months ahead".
India had exported approximately $10 billion worth of gems and jewellery products to the United States in the 2024 fiscal year, representing nearly 13 percent of its total shipments to the American market.
Prior to the tariff threat, the industry had benefitted from much lower duties, fluctuating between zero and 7 percent depending on the item.
The sector sustains the livelihoods of over four million Indians, including diamond cutters in Surat—responsible for processing 90 percent of the world’s diamonds—and merchants based in Mumbai.
Though India's proposed duty remained lower than tariffs imposed on competitors such as China, exporters had feared that increased jewellery prices would dampen American consumer spending once costs were passed on.
Head of jewellery manufacturing group Creations Jewellery in Mumbai, Adil Kotwal, anticipated a sharp contraction in the market.
"If a 26 percent tariff went through, higher inflation and weaker purchasing power could make the market shrink by 25 to 30 percent this year until prices stabilise," Kotwal declared. "An average American has a budget, he doesn't have an open-ended wallet," he added.
Kotwal explained the mindset of young American buyers. "Young people getting married... they have in their head, okay: 'I'll have to spend about $6,000, $7,000, I'll buy a nice ring for the engagement'," he said. "Now, his budget is going to go up to $10,000, and he'll have to figure out what to do."
Before the tariff suspension, Kotwal believed the added cost would prompt a rethink. "Either he scales down the size of the centre stone, or he goes for buying a lab-grown stone. Or he postpones engagement for a couple of months," he remarked.
India and the United States remained engaged in talks over the first tranche of a broader trade agreement. Exporters expressed hope that Indian Prime Minister Narendra Modi would manage to shield the sector from harsher outcomes.
From D. Navinchandra Exports, Ajesh Mehta commented on the market sentiment. "The industry as a whole has been gripped with uncertainty over the last few weeks, so that's lifted for now," he told the foreign news agency. "We hope that this 90-day period will also allow the government to negotiate the trade deal and resolve the issues."
Despite the pause, caution persisted. "We're still in wait-and-watch mode at this point," Mehta said. "The industry is currently in a slack period right now, as it is in between major holidays. But purchases from American buyers should continue – for now."
Most jewellers remained open to compromise on the tariff rate, even if a complete return to pre-Trump levels appeared unlikely. "If we conclude that there is going to be a 10 percent duty... that's where everybody will be able to live comfortably, without disruptions," Kotwal stated.
From Emerald Jewel Industry India, K. Srinivasan echoed both relief and concern. "We should continue to see purchases by American customers and buyers in these 90 days as the tariff differential isn't so big right now," Srinivasan said. "That said, on the 90th day, we may see a drop and purchases stop again if the issue doesn't get resolved."
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