Diamond Industry Seeks Urgent Government Aid as US Tariffs Slash Exports by 50%
India's diamond industry faces severe crisis as US tariffs rise to 50%, causing exports to fall nearly 50% and triggering over 1.5 lakh job losses in Surat. Exporters are shutting operations or shifting to lab-grown diamonds while urgently seeking government aid through compliance ease, targeted subsidies, and worker assistance packages to survive the downturn and retain skilled talent.
*this image is generated using AI for illustrative purposes only.
India's diamond industry is reeling under the impact of increased US tariffs, with exports falling dramatically and widespread job losses forcing the sector to seek urgent government intervention. The crisis has deepened significantly since the start of 2025, when additional trade barriers were imposed on one of the industry's most crucial markets.
Tariff Impact Creates Export Crisis
The diamond sector was already contending with weak demand from China at the beginning of 2025, relying on steady US orders for stability. However, the situation deteriorated sharply when US President Trump imposed an additional 25% tariff on Indian goods, including diamonds. This increase brought the total duty burden to 50%, creating a substantial barrier for Indian exporters in the American market.
The immediate impact has been severe across key performance metrics:
| Impact Area: | Details |
|---|---|
| Export Decline: | Nearly 50% drop since tariff implementation |
| Total US Duty: | 50% (including 25% additional tariff) |
| Job Losses in Surat: | Over 1.5 lakh workers affected |
| Operational Impact: | Factory closures and business shutdowns |
Industry Response and Operational Changes
The tariff burden has forced significant operational adjustments across the diamond processing sector. Several exporters have either closed their operations entirely or shifted focus to lab-grown diamonds, though this alternative offers much thinner profit margins. The transition has been particularly challenging for businesses heavily invested in natural diamond processing infrastructure.
The impact has been most pronounced on workers involved in cutting and polishing operations. Surat, recognized as the heart of India's diamond industry, has borne the brunt of these changes with job losses estimated at more than 1.5 lakh workers.
Urgent Call for Government Support
"The government should provide some sort of assistance to diamond workers as they are suffering a lot. Their livelihood is impacted, and they have families to run," said Kumar Jain, a diamond exporter, highlighting the human cost of the trade disruption.
Industry representatives have identified specific areas where government intervention could provide relief:
- Easing compliance norms for exporters
- Offering targeted subsidies to help businesses survive the downturn
- Financial assistance packages for affected workers
- Support measures to retain skilled talent in the sector
Alternative Markets and Future Prospects
While India has established trade relationships through free trade agreements with countries including the UK and Oman, plus broader deals with Switzerland, Norway, Iceland, and Liechtenstein, exporters acknowledge that developing substantial trade volumes in high-value items like diamonds requires considerable time and market development.
The industry maintains hope for an early Indo-US trade agreement that could help restore access to the American market. However, until such arrangements materialize, immediate government support remains critical for sector survival.
Workforce Retention Concerns
Beyond immediate financial pressures, exporters express concern about long-term industry capacity. Workers are experiencing layoffs and wage cuts, creating risk that skilled labor may permanently shift to other occupations. Industry leaders warn this talent migration could severely hamper the sector's ability to scale operations when global demand eventually recovers, making worker retention support a strategic priority for maintaining India's competitive position in the global diamond market.
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