India-US Interim Trade Agreement Ignites Major Rally in Jewellery Stocks
In a significant market development, jewellery stocks experienced a powerful surge on Monday, with gains reaching up to 12% following the announcement of an Interim Trade Agreement (ITA) between India and the United States. The joint statement outlining this framework has injected fresh optimism into the gems and jewellery sector, which has been grappling with export challenges in recent years.
Trade Deal Framework Provides Crucial Tariff Clarity
The newly announced framework represents the first concrete step toward a broader Bilateral Trade Agreement (BTA) between the two economic giants. Market participants have welcomed the agreement as it brings much-needed clarity on tariffs for export-oriented industries, with the jewellery sector emerging as a primary beneficiary.
The United States remains one of the largest consumption markets for Indian jewellery exports, and industry experts believe this deal will directly support manufacturers, exporters, and organized retailers with international exposure. Investor sentiment strengthened considerably as the framework signals potential tariff removals on a wider range of products over time, significantly improving the medium-term outlook for the entire sector.
Specific Terms of the Trade Agreement
Under the comprehensive framework, the United States will apply an 18% reciprocal tariff on various Indian goods including:
- Textiles and apparel
- Leather and footwear
- Jewellery and gems
- Plastics and rubber products
- Organic chemicals
- Home décor items
- Artisanal products
- Certain machinery categories
In exchange for these arrangements, the United States will receive tariff reductions across multiple sectors, particularly food and agricultural products. Additionally, India has committed to $500 billion in planned purchases over the next five years as part of the long-term agreement.
A notable component of the deal involves the removal of the 25% Russian oil-related duty on Indian imports. This removal is contingent upon India ceasing Russian oil imports and committing to US energy purchases, with a monitoring mechanism established to ensure compliance.
Major Stock Movements Across the Jewellery Sector
Buying interest was widespread throughout the jewellery segment during Monday's trading session. Kalyan Jewellers led the rally with an impressive surge of over 11.7%, closing at ₹424.30. Senco Gold followed closely with a gain of nearly 7%, reaching ₹355.75.
Other significant movers included P N Gadgil Jewellers, which advanced approximately 6% to ₹582.15, and Thangamayil Jewellery, which rose over 5% to ₹3,555.30. PC Jeweller recorded gains around 4% at ₹10.56, while industry giant Titan Company moved up over 2% to ₹4,227.80 as investors priced in a stronger export outlook following the trade agreement announcement.
Industry Experts Hail the Development
Colin Shah, Managing Director of Kama Jewelry, expressed enthusiasm about the agreement, stating: "The announcement of zero tariff on gems and diamonds is a momentous one and well rejoiced by the Indian gems and jewellery sector. India being the global hub for diamond processing was impacted severely due to the trade tariffs, where trade had dropped over 60% when it comes to cut and polished diamonds. The waiver of tariff will help revive exports and reinstate the sparkle in business."
Shah further emphasized that the industry is grateful to the Indian government and the Ministry of Commerce for their negotiation efforts. He noted that this strategic move would not only provide a substantial boost to the sector but also contribute meaningfully to the broader goal of Aatmanirbhar Bharat by adding long-term value and supporting domestic manufacturing and export capabilities.
Revival of Export Volumes and Sector Confidence
Industry participants believe the clarity on tariffs could help revive export volumes that have been significantly impacted in recent years. The agreement is expected to restore confidence across the entire value chain, from raw material suppliers to finished product exporters.
The gems and jewellery sector has faced considerable headwinds due to trade uncertainties and tariff complexities. This interim agreement represents a crucial turning point that could potentially reverse the downward trend in export volumes and position Indian jewellery manufacturers more competitively in the global marketplace.
As the framework evolves toward a comprehensive bilateral trade agreement, market observers anticipate continued positive momentum for jewellery stocks and related sectors that stand to benefit from improved trade relations between India and the United States.
