India-EU Free Trade Agreement to Eliminate Import Duties on Gems and Jewellery
The European Union's decision to scrap import duties on Indian gems and jewellery under the newly announced India-EU Free Trade Agreement (FTA) represents a significant opportunity for India's export sector. This strategic move could partly offset the impact of steep US tariffs, according to industry experts and trade analysts.
Current Trade Landscape and Future Prospects
The EU currently levies import duties ranging from 2.5% to 4% on finished jewellery—including studded, plain, and imitation pieces—from India. These tariffs will be completely eliminated under the FTA, which is expected to take effect from early 2027. This timeline reflects both the substantial size of the EU market and the procedural requirements observed in similar agreements with countries like Australia and the United Arab Emirates, which typically took between six months and one year to implement.
India currently maintains a modest trade advantage in gems and jewellery with the EU. In 2024, Indian jewellery exports to the European Union stood at $628 million, accounting for approximately 3.78% of the bloc's total jewellery imports of $16.63 billion. During the same period, India's overall exports to the EU totaled $2.7 billion, while imports from the EU reached $2.5 billion.
Industry Perspectives and Economic Impact
Kirit Bhansali, chairman of the Gem and Jewellery Export Promotion Council (GJEPC), emphasized the transformative potential of this agreement. "This deal will significantly benefit the exports of finished jewellery from India," Bhansali stated. "It provides an excellent opportunity for our jewellery companies to expand their exports to the European bloc and contribute substantially to earning valuable foreign exchange."
Bhansali anticipates that bilateral trade in gems and jewellery with the EU could double to $10 billion over the next three years. Importantly, while the EU eliminates duties on Indian jewellery, India's tariffs on jewellery imports from EU nations will continue at approximately 22%. This creates a significant competitive advantage for Indian jewellers compared to competitors from Hong Kong, China, and Thailand, whose exports to the EU will continue to face duties of 2.5-4%.
Market Response and Certification Advantages
The announcement has already generated positive reactions in financial markets. Shares of major jewellery companies showed mixed but generally favorable movements:
- Kalyan Jewellers India closed up 0.5% at ₹368.9
- Senco Gold gained 0.8% to close at ₹308.25
- Titan Co. experienced a slight decline of 0.6%, ending at ₹3,997
Beyond the immediate tariff relief, industry executives highlight additional benefits. The agreement could enhance acceptance of Indian studded jewellery in European markets, supported by India's expanding global certification infrastructure. Ramit Kapur, managing director of Gemological Science International (GSI), explained this advantage: "This is a very positive development for India, which not only possesses immense manufacturing capability to serve global markets but has also significantly enhanced its finishing standards through government-supported common facility centers (CFCs)."
Kapur further noted that the presence of global certification laboratories like GSI in India will help authenticate studded jewellery for European buyers, thereby improving trust and market access. "We expect studded jewellery sales to the EU to increase by at least 15% in the coming months, alongside higher employment opportunities for skilled workers," he projected.
Strategic Implications for India's Export Economy
The India-EU FTA represents more than just tariff elimination—it signifies a strategic deepening of economic ties between two major global economies. For India's gems and jewellery sector, which has faced challenges from US tariffs and global competition, this agreement opens new avenues for growth and diversification.
The sector's enhanced access to European markets comes at a crucial time when global trade dynamics are shifting. With India's manufacturing capabilities, improved quality standards, and robust certification infrastructure, the country is well-positioned to capitalize on this opportunity and strengthen its position as a leading global jewellery exporter.
