Crisis in the Diamond Capital
Surat, the undisputed global hub where eight out of every ten diamonds are cut and polished, is facing an existential threat. Already grappling with a prolonged market slowdown, the city's massive diamond industry has been rocked by the United States' decision to impose a steep new tariff on Indian gems and jewellery. This move, coming just as businesses were preparing for the critical Christmas season, has sent a shockwave through the industry, threatening to cripple exports, eliminate over a hundred thousand jobs, and unravel the economic fabric of a city built on sparkle.
From Slowdown to Shutdown
The new American tariffs could not have come at a worse time. The Indian gems and jewellery sector, particularly its diamond trade, was already in a precarious position. Exports of cut and polished diamonds to the U.S.—India's largest market—had already plummeted from nearly $10 billion in 2021-22 to under $5 billion in 2024-25. This downturn had forced major players to curtail production, with some factories reducing their workforce and others shifting to the less capital-intensive lab-grown diamond market. Even global mining giants like De Beers had cut production in response to the slump in demand.
The fresh tariff blow has turned this challenging situation into a full-blown crisis. Diamond companies in Surat were immediately forced to halt Christmas orders from their American clients, a devastating blow given that the festive season accounts for nearly half of their annual international sales. The new duty makes Indian diamonds significantly less competitive than those from rival hubs like Israel, which faces a much lower tariff. Industry leaders are now bracing for a further crash in exports, with one major exporter noting that production in their factories had already fallen by over 30% before this latest shock.
The Human Cost of a Trade War
The true cost of this trade dispute will be measured in human terms. The Gems & Jewellery Export Promotion Council (GJEPC) has issued a dire warning, estimating that the new tariffs could lead to the loss of approximately 125,000 jobs in the coming months. These losses will be concentrated in the diamond cutting and polishing hubs of Gujarat, Maharashtra, and Rajasthan, with Surat being the hardest hit.
The city's diamond industry employs over six lakh polishers, a highly skilled workforce of mostly migrant workers. For them, the slowdown has already meant reduced working hours and layoffs. The new tariffs threaten to accelerate this trend, pushing thousands of families into financial distress. The cascading effect on the local economy, from small businesses to service providers, could be immense.
An Industry on the Brink
Faced with this unprecedented challenge, the industry is scrambling for solutions. The GJEPC has appealed to the Indian Commerce Ministry for immediate intervention, suggesting a targeted reimbursement mechanism to help exporters absorb a portion of the additional tariff burden. Some company owners are hoping to negotiate with their long-standing U.S. buyers, appealing to them to share the cost. However, with no other country possessing the consumption capacity of the U.S., the options for diverting trade are limited.
While some are exploring newer markets or hoping for a last-minute diplomatic resolution, the mood in Surat is one of deep concern. The city that polishes the world's diamonds now finds its own future looking increasingly rough.
The Hardest Cut
- A Crippling Blow: New U.S. tariffs have hit Surat's diamond industry, which was already weakened by a significant drop in exports over the past two years.
- Massive Job Losses Feared: The industry's trade council warns that the tariffs could lead to an estimated 125,000 job losses, primarily affecting the skilled polishers of Surat.
- Competitive Disadvantage: The high tariffs make Indian diamonds less competitive than those from rival countries like Israel, which face lower duties in the U.S. market.
- Industry Seeks Government Help: The Gems & Jewellery Export Promotion Council has appealed to the Indian government for financial support to help the industry absorb the impact of the tariffs.
