U.S. Tariff Hike Threatens India’s Diamond Industry: CRISIL Projects 28-30% Revenue Dip for Polishers India, long celebrated as the global hub for diamond cutting and polishing, is facing stormy waters as new trade policies from the United States are set to deal a sharp blow to its exporters. According to a recent report by credit rating agency CRISIL, Indian diamond polishers are likely to see their revenues fall by 28-30% this fiscal year, a consequence of the recent U.S. tariff hike. This development not only threatens the fortunes of one of India’s most valuable industries but also casts uncertainty over the livelihoods of thousands of workers in Gujarat—especially in Surat, known as the “Diamond City of the World.” Why the U.S. Tariff Hike Matters The United States is India’s largest export market for polished diamonds, accounting for nearly 40% of overall demand. A tariff increase, even by a few percentage points, sharply affects prices in an industry where margins are already thin. CRISIL’s analysis suggests that the higher duty will squeeze the competitiveness of Indian exporters compared to rivals in countries like Belgium and the UAE, who may benefit from more favorable trade terms. For Indian firms, this could translate into reduced orders from international retailers and weaker bargaining power against global buyers. Numbers That Reflect the Crisis Indian diamond polishers earned around $23 billion in FY2023-24 from polished diamond exports. With the new U.S. tariffs, revenues are projected to shrink by 28-30% in FY25, potentially bringing totals down to $16-17 billion. This sharp decline could also reduce the industry’s operating profit margins by nearly 200 basis points, according to CRISIL. This downturn comes at a time when the global luxury sector is already under pressure due to slowing demand in key markets like the U.S. and China. For India’s diamond industry, which was banking on a revival after the pandemic dip, the timing could not be worse. Gujarat’s Diamond Workers in the Firing Line At the heart of the crisis are the workers of Surat, Navsari, and Amreli—towns that dominate India’s diamond cutting and polishing trade. The industry provides direct and indirect employment to over one million people, many of them skilled artisans who have spent decades mastering the craft of turning rough stones into sparkling gems. With reduced export orders, many firms may resort to shorter workweeks, delayed wages, or even temporary shutdowns. Diamond worker associations have already begun voicing concerns that migrant laborers, who constitute a major portion of the workforce, could face financial distress due to job insecurity. The Domino Effect on India’s Economy The Indian gems and jewelry industry contributes nearly 7% to the country’s GDP and accounts for around 15% of total merchandise exports. Within this, diamonds hold a dominant share. A sharp contraction in this sector will ripple beyond diamond polishers, hurting suppliers, traders, logistic companies, and even the retail jewelry market. In the long term, sustained pressure could reduce India’s global market share in diamond polishing, allowing smaller competitors—such as Botswana, Namibia, and even China—to eat into India’s dominance. Why U.S. Retailers Can’t Be Ignored The U.S. remains the world’s largest consumer of polished diamonds. American households, despite economic slowdowns, consistently spend on jewelry for occasions like weddings, anniversaries, and holidays. Major global retailers like Tiffany & Co., Signet, and Zales depend heavily on supplies from India. But higher tariffs mean that buyers may either: Push Indian firms to absorb some of the costs, squeezing margins. Shift part of their sourcing to other markets, bypassing Indian exporters. In both scenarios, Indian diamond polishers are at a disadvantage, forced to either sacrifice profits or lose market share. The Growing Threat from Lab-Grown Diamonds As if tariffs weren’t enough, Indian exporters also face rising competition from lab-grown diamonds (LGDs), which are gaining popularity across the globe. LGDs cost 40-50% less than natural diamonds and are especially attractive to younger buyers in markets like the U.S. For Indian polishers already burdened by tariffs, the growing acceptance of LGDs adds another hurdle to sustaining revenue growth. How the Industry Is Responding To navigate this turbulent phase, several measures are being considered: Market Diversification – Exporters are looking beyond the U.S. to regions like the Middle East, Europe, and even emerging luxury markets in Southeast Asia, which could help spread the risk. Cost Optimization – Some polishing units are cutting down on operational costs, investing in automation, and reworking labor schedules to maintain efficiency. Government Appeals – Industry bodies are urging the Indian government to engage in trade talks with U.S. counterparts to seek concessions or explore incentives to cushion diamond exporters from the tariff shock. Value Addition – Rather than just cutting and polishing, India may focus more on designing finished jewelry with polished diamonds, thereby capturing higher margins and reducing dependency on rough diamond imports. Silver Linings and Long-Term Prospects While the near-term outlook appears grim, analysts believe India’s diamond polishing hub will reinvent itself. The industry has survived past cycles of demand volatility, including the 2008 global financial crisis and the pandemic downturn, and has always bounced back. Moreover, India continues to hold unparalleled expertise in diamond cutting, handling nearly 90% of the world’s diamonds by volume. This skill advantage may act as a buffer, ensuring India remains relevant even as external challenges mount. Human Faces Behind the Numbers Beyond statistics, what makes this development worrisome is its human impact. For artisans in Surat, polishing diamonds isn’t just a job—it’s a lifeline passed down through generations. These workers are rightly proud of their ability to transform rough stones into dazzling treasures that adorn households worldwide. For many, the U.S. tariff hike feels like a storm they had no hand in creating but will have to weather. Worker groups stress the importance of timely policy interventions, both locally and globally, to ensure families dependent on this centuries-old craft are not left vulnerable.

Technalogy8922

New Service Preet Vihar, East Delhi•

on 28 August

U.S. Tariff Hike Threatens India’s Diamond Industry: CRISIL Projects 28-30% Revenue Dip for Polishers India, long celebrated as the global hub for diamond cutting and polishing, is facing stormy waters as new trade policies from the United States are set to deal a sharp blow to its exporters. According to a recent report by credit rating agency CRISIL, Indian diamond polishers are likely to see their revenues fall by 28-30% this fiscal year, a consequence of the recent U.S. tariff hike. This development not only threatens the fortunes of one of India’s most valuable industries but also casts uncertainty over the livelihoods of thousands of workers in Gujarat—especially in Surat, known as the “Diamond City of the World.” Why the U.S. Tariff Hike Matters The United States is India’s largest export market for polished diamonds, accounting for nearly 40% of overall demand. A tariff increase, even by a few percentage points, sharply affects prices in an industry where margins are already thin. CRISIL’s analysis suggests that the higher duty will squeeze the competitiveness of Indian exporters compared to rivals in countries like Belgium and the UAE, who may benefit from more favorable trade terms. For Indian firms, this could translate into reduced orders from international retailers and weaker bargaining power against global buyers. Numbers That Reflect the Crisis Indian diamond polishers earned around $23 billion in FY2023-24 from polished diamond exports. With the new U.S. tariffs, revenues are projected to shrink by 28-30% in FY25, potentially bringing totals down to $16-17 billion. This sharp decline could also reduce the industry’s operating profit margins by nearly 200 basis points, according to CRISIL. This downturn comes at a time when the global luxury sector is already under pressure due to slowing demand in key markets like the U.S. and China. For India’s diamond industry, which was banking on a revival after the pandemic dip, the timing could not be worse. Gujarat’s Diamond Workers in the Firing Line At the heart of the crisis are the workers of Surat, Navsari, and Amreli—towns that dominate India’s diamond cutting and polishing trade. The industry provides direct and indirect employment to over one million people, many of them skilled artisans who have spent decades mastering the craft of turning rough stones into sparkling gems. With reduced export orders, many firms may resort to shorter workweeks, delayed wages, or even temporary shutdowns. Diamond worker associations have already begun voicing concerns that migrant laborers, who constitute a major portion of the workforce, could face financial distress due to job insecurity. The Domino Effect on India’s Economy The Indian gems and jewelry industry contributes nearly 7% to the country’s GDP and accounts for around 15% of total merchandise exports. Within this, diamonds hold a dominant share. A sharp contraction in this sector will ripple beyond diamond polishers, hurting suppliers, traders, logistic companies, and even the retail jewelry market. In the long term, sustained pressure could reduce India’s global market share in diamond polishing, allowing smaller competitors—such as Botswana, Namibia, and even China—to eat into India’s dominance. Why U.S. Retailers Can’t Be Ignored The U.S. remains the world’s largest consumer of polished diamonds. American households, despite economic slowdowns, consistently spend on jewelry for occasions like weddings, anniversaries, and holidays. Major global retailers like Tiffany & Co., Signet, and Zales depend heavily on supplies from India. But higher tariffs mean that buyers may either: Push Indian firms to absorb some of the costs, squeezing margins. Shift part of their sourcing to other markets, bypassing Indian exporters. In both scenarios, Indian diamond polishers are at a disadvantage, forced to either sacrifice profits or lose market share. The Growing Threat from Lab-Grown Diamonds As if tariffs weren’t enough, Indian exporters also face rising competition from lab-grown diamonds (LGDs), which are gaining popularity across the globe. LGDs cost 40-50% less than natural diamonds and are especially attractive to younger buyers in markets like the U.S. For Indian polishers already burdened by tariffs, the growing acceptance of LGDs adds another hurdle to sustaining revenue growth. How the Industry Is Responding To navigate this turbulent phase, several measures are being considered: Market Diversification – Exporters are looking beyond the U.S. to regions like the Middle East, Europe, and even emerging luxury markets in Southeast Asia, which could help spread the risk. Cost Optimization – Some polishing units are cutting down on operational costs, investing in automation, and reworking labor schedules to maintain efficiency. Government Appeals – Industry bodies are urging the Indian government to engage in trade talks with U.S. counterparts to seek concessions or explore incentives to cushion diamond exporters from the tariff shock. Value Addition – Rather than just cutting and polishing, India may focus more on designing finished jewelry with polished diamonds, thereby capturing higher margins and reducing dependency on rough diamond imports. Silver Linings and Long-Term Prospects While the near-term outlook appears grim, analysts believe India’s diamond polishing hub will reinvent itself. The industry has survived past cycles of demand volatility, including the 2008 global financial crisis and the pandemic downturn, and has always bounced back. Moreover, India continues to hold unparalleled expertise in diamond cutting, handling nearly 90% of the world’s diamonds by volume. This skill advantage may act as a buffer, ensuring India remains relevant even as external challenges mount. Human Faces Behind the Numbers Beyond statistics, what makes this development worrisome is its human impact. For artisans in Surat, polishing diamonds isn’t just a job—it’s a lifeline passed down through generations. These workers are rightly proud of their ability to transform rough stones into dazzling treasures that adorn households worldwide. For many, the U.S. tariff hike feels like a storm they had no hand in creating but will have to weather. Worker groups stress the importance of timely policy interventions, both locally and globally, to ensure families dependent on this centuries-old craft are not left vulnerable.