Almost a month into US president Donald Trump’s 50% reciprocal tariff imposition on India, the country’s diamond industry is struggling to keep afloat.
A report by CareEdge Ratings stated that if the 50% tariff is fully passed on, it will likely impact the cut and polished diamonds (CPD) segment, and it estimated a 17-20% decline in CPD exports to the US in FY26.
A statement by Akhil Goyal, director at CareEdge Ratings, said, “Tariffs increasing to 50% by a key diamond-consuming nation is expected to exacerbate the demand sluggishness in the CPD industry. The industry continues to face competition from LGDs, and there is limited offsetting potential from alternative markets, such as India and China.”
The US accounts for over 40% of global polished diamond demand, and in FY25, it accounted for 37% of India’s CPD exports.
Dinesh Lakhani, group director at Kiran Gems noted that despite companies diversifying their markets and cutting costs, the projections seem “realistic as a base case.” Whether the decline reaches the top of that band will hinge on how quickly US demand recovers and whether the tariff rate changes, but at present the 17–20% range is a credible working estimate, he added.
Industry response: Diversification and the LGD Shift
Despite acknowledging that replacing the US market is extremely difficult, exporters such as Vipul Shah of Asian Star are beginning to foray into alternative markets. “In anticipation of higher tariffs, my company had already shipped out goods to the US in August, when the tariff stood at 10%. Currently, demand from the country is extremely low. We are currently exploring the Middle East and European markets while also catering to growing demand in the domestic market. Nonetheless, the tariffs have hampered our growth by 25-30%,” he told FE.
While demand in the Indian market grew substantially in 2025, it provides limited offsetting potential, according to CareEdge Ratings. Ashesh Doshi of AN Diamonds has taken an alternate path, manufacturing lab-grown diamonds (LGDs). “Although my company was manufacturing CPDs from natural ones, our profit margins were already slim, at 4-5%. With the tariffs, it just wasn’t sustainable. While LGD manufacturing was a safety net, it is now fully integrated in my operations as it doesn’t have a high manufacturing cost,” he said. Doshi also noted that China, which saw a steep decline in diamond imports since 2021, is gradually reopening. “In a recent gems and jewellery trade show in Hong Kong, Indian diamond manufacturers received many enquiries. We hope to convert these enquiries into orders in the coming few weeks,” he shared.
Seeking government relief and global market signals
While exporters and manufacturers hang in the balance, the Gems & Jewellery Export Promotion Council (GJEPC) continues moving the government to provide the sector urgent leave. This includes measures such as extending export obligation periods for US shipments, providing an interest moratorium on packing credit, allowing SEZ units to undertake reverse job work and DTA sales to keep factories and artisans engaged.