US-India Trade Deal Rekindles Optimism for Surat's Diamond Manufacturing Hub
The proposed trade agreement between the United States and India has injected fresh hope into the diamond manufacturing sector of Surat, the world's largest cutting and polishing center. Industry sources indicate that the deal is expected to bring zero duty on loose diamonds, offering a potential lifeline to an industry grappling with significant challenges.
Addressing Industry Headwinds and Export Declines
The diamond industry has been facing multiple difficulties, including falling diamond prices and restrictions related to Russian-mined rough materials. While several obstacles remain, stakeholders acknowledge that the trade deal provides clarity on at least one crucial concern. The Gem and Jewellery Export Promotion Council (GJEPC) has described the agreement as a landmark development and a major relief for the sector.
The United States serves as India's largest export market for gems and jewellery, accounting for approximately 31% of total exports, which amounts to about $9.23 billion in the fiscal year 2024-25. However, the introduction of reciprocal US tariffs in 2025 severely disrupted trade flows. Duties on polished diamonds and colored gemstones increased from 0% to 10% in April and further escalated to 50% by August, tightening liquidity and squeezing profit margins. Additionally, jewellery duties saw steep rises from 5-7% to 55-57%.
Significant Export Plunge and Industry Response
Exporters rushed to ship substantial volumes before the higher tariff rates took effect, but uncertainty over policy changes kept the industry on edge. Consequently, exports to the US witnessed a dramatic 44% decline between April and December 2025, dropping from $8.6 billion to $3.8 billion. Specific categories experienced even steeper falls:
- Cut and polished diamond exports decreased by over 60%, from $3.6 billion to $1.4 billion.
- Studded gold jewellery exports declined by 24%, from $2.1 billion to $1.5 billion.
- Plain gold jewellery shipments fell by 28%, from $258 million to $184 million.
Industry players emphasize that a tariff reduction would lower costs for US importers and enhance the competitiveness of Indian diamond jewellery in its primary market. This improvement is anticipated to help revive demand and stabilize operations across the sector.
Official Optimism and Expected Benefits
Kirit Bhansali, chairman of GJEPC, expressed optimism regarding the trade deal's impact. He stated, "GJEPC is optimistic that, based on India signing the trade deal, loose diamonds and colored gemstones from India will get the benefit of zero-duty imports in the USA, vide Annexure 3 of the US reciprocal tariff list, providing much-needed support for diamond exports. This will enhance trade flows, rebuild confidence, and deliver a strong sector-wide boost."
The anticipated zero-duty provision is seen as a critical step toward revitalizing the diamond industry in Surat, potentially reversing the recent export declines and fostering a more stable operational environment. As negotiations progress, stakeholders remain hopeful that this agreement will mark a turning point for one of India's most significant export sectors.
