04-apr-2025, 01:12 PMThe recent imposition of a 27% tariff by the United States on Indian Gems & Jewellery exports has sent shockwaves through India’s thriving industry. As the U.S. accounts for nearly one-third of India’s $32 billion Gems & Jewellery exports, this substantial duty hike is expected to have profound implications on trade dynamics, employment, and the broader economy.
Gems & Jewellery Sector
The U.S. has been a pivotal market for Indian Gems & Jewellery, with exports totaling approximately $10 billion annually. The introduction of a 27% tariff threatens to significantly diminish this trade volume. Previously, products like cut and polished diamonds faced no import duty; however, under the new tariff regime, they will attract the full 27% duty. Similarly, gold and platinum jewellery, which earlier had duties ranging from 5.5% to 7%, will now be subjected to combined tariffs exceeding 30%.
Gems & Jewellery Potential Decline in Exports
Industry experts predict a sharp decline in exports to the U.S. due to the increased cost burden on American consumers. The heightened prices may render Indian products less competitive compared to those from countries not subjected to such tariffs. This potential decrease in demand could lead to a contraction of India’s share in the U.S. Gems & Jewellery market.
Broader Economic Implications
Employment Concerns
The Gems & Jewellery sector is a significant employment generator in India, providing livelihoods to millions, especially in regions renowned for diamond cutting and jewellery manufacturing. A downturn in exports could necessitate workforce reductions, impacting artisans and laborers who rely on this industry.
Ripple Effect on Ancillary Industries
A slump in the Gems & Jewellery sector could adversely affect related industries, including mining, logistics, and retail, thereby amplifying the economic repercussions.
Industry’s Response and Strategic Measures
Advocacy for Bilateral Trade Agreements
The Gem and Jewellery Export Promotion Council (GJEPC) has emphasized the urgency of expediting bilateral trade agreements between India and the U.S. to address and potentially mitigate the impact of these tariffs. Such agreements could pave the way for more favorable trade terms and reduce tariff burdens.
Diversification of Export Markets
To lessen dependence on the U.S. market, Indian exporters are exploring opportunities in other regions, including Europe, the Middle East, and Asia. Diversifying the export portfolio can help cushion the blow from the U.S. tariffs and open new avenues for growth.
Enhancing Product Value
Focusing on high-value, unique designs and superior craftsmanship can differentiate Indian products in the global market. By emphasizing quality and exclusivity, Indian jewellers can justify premium pricing, potentially offsetting the impact of increased tariffs.
Conclusion
The imposition of a 27% tariff by the U.S. on Indian Gems & Jewellery exports presents a formidable challenge to the industry. While the immediate effects are concerning, proactive measures such as pursuing favorable trade agreements, diversifying markets, and enhancing product value can help navigate this turbulent period. The resilience and adaptability of India’s Gems & Jewellery sector will be crucial in overcoming these obstacles and sustaining its global prominence.
Source: ANI
