US Tariff Cut Boosts India's Gem Exports

The United States has announced a significant reduction in tariffs on gems and jewellery, lowering them from 50% to 18%. This decision, made on Monday, is a vital measure to revive the sector, which has faced six months of uncertainty, shipment delays, and strained working capital. The US remains India's largest export market for gems and jewellery, accounting for 31% or $9.23 billion of total exports in FY25. Reciprocal US tariffs had previously disrupted trade flows sharply, impacting exporters.

This tariff cut provides India with a competitive pricing edge over rival exporters, such as Pakistan and Vietnam, where tariffs are now 1-2 percentage points higher. Experts believe this will help Indian exporters regain market share in the US. The sector, which ranks as India's third-largest export category to the US, supports millions of livelihoods. Sustained high tariffs had previously led to warnings of job losses and significant harm to small and medium export units.

Analysts describe the reduction as "structurally positive" for India's medium-term growth and external stability. Sectors with high US exposure, like gems and jewellery, are expected to benefit from improved market access and more competitive exports. This development also comes at a time when India is pursuing trade deals with the EU, its second-largest export market, aiming to diversify operations amidst growing geopolitical uncertainties.