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Gems and jewellery exports fall to five-year low on U.S. tariffs

April 15, 2026 5 min read Economics International Relations GS Paper 3 (Indian Economy) GS Paper 2 (International Relations)
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What Happened

  • India's gems and jewellery exports fell to a five-year low as shipments to the United States plunged 45% year-on-year to USD 5.09 billion, according to data from the Gem and Jewellery Export Promotion Council (GJEPC).
  • The sector had been disrupted for several months after Washington first imposed "reciprocal tariffs" — 26% on gems and jewellery — and subsequently added a further 25% duty on Indian goods, taking the effective rate to 55% at its peak.
  • The steep tariff increase made Indian-origin jewellery uncompetitive in the US market relative to other suppliers, causing a severe demand shift away from Indian products.
  • The India-US bilateral trade framework announced in February 2026 provides relief: it envisages a revised 18% tariff on jewellery and zero duty on diamonds and coloured gemstones — but this framework requires recalibration following the US Supreme Court's IEEPA ruling, delaying certainty for the sector.
  • GJEPC has projected that the tariff rollback under the India-US trade deal, once implemented, could lift exports to the US by up to USD 3 billion in the near term.
  • Meanwhile, India has diversified exports: UAE (+23.71%), Hong Kong (+33.5%), Australia (+36%), and France (+36%) showed robust growth in the April 2025-January 2026 period.

Static Topic Bridges

India's Gems and Jewellery Sector: Economic Significance

Gems and jewellery is one of India's most important export industries, combining large-scale employment with high export value and deep integration with global supply chains.

  • India is the world's largest cutting and polishing centre for diamonds — approximately 90% of the world's diamonds (by volume) are cut and polished in India, primarily in Surat (Gujarat).
  • The sector contributes approximately 7-8% of India's total merchandise exports in a typical year (value terms, approximately USD 30-35 billion annually pre-disruption).
  • It is a major employer of artisans and semi-skilled labour, with an estimated 4-5 million workers engaged across the value chain.
  • Key export destinations: USA (largest by value), UAE, Hong Kong, Belgium, Israel.
  • GJEPC (Gem and Jewellery Export Promotion Council) is the apex industry body, established under the Export Promotion Councils Act; it is the official data source for sector exports.
  • The sector is highly sensitive to import duties in destination countries because gems and jewellery are discretionary, high-value goods where price competitiveness is critical.

Connection to this news: The US, historically India's largest gems and jewellery export market, became unviable at effective tariff rates of 55% — causing exports to collapse 45%. The sector's recovery is directly tied to the progress of India-US trade negotiations.

US Reciprocal Tariffs and the IEEPA Framework

The Trump administration's "reciprocal tariff" policy, announced April 2025, imposed sweeping country-specific tariffs on imports from major trading partners, justified under IEEPA (International Emergency Economic Powers Act).

  • India was assigned a 26% "reciprocal tariff" under the initial IEEPA proclamation of April 2025.
  • An additional 25% tariff was later imposed on specific Indian goods categories (including gems and jewellery), bringing the effective combined rate to ~55% for jewellery at peak.
  • IEEPA tariffs were struck down by the US Supreme Court in February 2026, prompting replacement under Section 122 of the Trade Act of 1974 (10% surcharge, valid 150 days from February 24, 2026).
  • The India-US bilateral framework (announced February 2026) pre-emptively negotiated: 18% tariff on jewellery and zero duty on natural diamonds and coloured gemstones — positions that now need to be restructured within the post-IEEPA legal framework.
  • The US is India's largest gems and jewellery export market; a high tariff regime directly hits the most export-intensive sector.

Connection to this news: The five-year-low in exports reflects the cumulative impact of approximately 9-12 months of elevated US tariffs; the path to recovery runs through successful conclusion of the India-US trade deal to restore lower, competitive duty rates.

Export Promotion Councils: Role and Structure

Export Promotion Councils (EPCs) are key institutional actors in India's trade ecosystem, providing industry-specific data, advocacy, and export support.

  • EPCs are non-profit organisations set up under the Ministry of Commerce and Industry to promote exports of specific product categories.
  • Functions: data collection, market intelligence, trade fair participation, liaison with government on policy, export certification.
  • GJEPC (Gem and Jewellery Export Promotion Council) was established in 1966 and is headquartered in Mumbai; it issues export certification and maintains detailed trade statistics for the sector.
  • Other major EPCs: APEDA (Agricultural and Processed Food Products Export Development Authority — technically a statutory authority under APEDA Act 1985), EEPC India (Engineering Exports), FIEO (Federation of Indian Export Organisations), PHARMEXCIL (Pharmaceuticals).
  • EPCs serve as the official data source for sector-specific trade statistics (supplementing DGCI&S aggregate data).

Connection to this news: The GJEPC data showing a 45% drop in US exports and five-year-low overall performance is the primary statistical basis for assessing the tariff damage — and EPCs play a crucial role in lobbying the government for relief and informing FTA negotiations with specific sector data.

Key Facts & Data

  • Gems and jewellery exports FY2025-26 (Apr 2025-Jan 2026): USD 23.19 billion (-0.64% in USD terms, +3.57% in rupee terms)
  • Exports to the US: fell ~45% to USD 5.09 billion (five-year low)
  • Peak US tariff on Indian gems and jewellery: approximately 55% (26% reciprocal + 25% additional)
  • India-US trade deal tariff proposal: 18% on jewellery, zero on diamonds and coloured gemstones
  • Projected export uplift from tariff normalisation: up to USD 3 billion
  • Gems and jewellery as % of India's merchandise exports: ~7-8% (normal year)
  • India's share in global diamond cutting and polishing: ~90% by volume
  • Major cutting centre: Surat, Gujarat
  • Sector employment: ~4-5 million workers
  • GJEPC founded: 1966; HQ: Mumbai
  • Market diversification wins: UAE +23.71%, Hong Kong +33.5%, Australia +36%, France +36%