Indian Gem & Jewellery Exporters Accelerate Shipments to US Ahead of Potential Tariffs

Indian Gem & Jewellery Exporters :

In anticipation of potential new tariffs from the United States, Indian gems and jewellery exporters rapidly dispatched goods worth $500 million to the US market between March 26th and April 2nd. This proactive move, equivalent to about a month’s typical production, was undertaken to provide the industry with an estimated three months of relief from the expected duties.

Officials from the Gems and Jewellery Export Promotion Council (GJEPC) highlighted the extraordinary effort involved, noting that they requested Indian customs authorities to work extended hours to facilitate the timely clearance of these exports to the US.

Industry sources indicated that exporters were bracing for a minimum tariff of 10%, a rate that would significantly impact their shipments by making Indian jewellery less affordable for American consumers. Such a tariff would pose a severe challenge, especially at a time when the diamond cutting and polishing segment is already navigating difficulties. Consequently, exporters were advised to quickly send out their ready-to-ship inventory to the US.

While the US has currently paused the implementation of a 26% reciprocal tariff for a 90-day period, the Indian gems and jewellery industry remains hopeful that India and the US can finalize a bilateral trade treaty before this pause expires.

The GJEPC, the leading body for gems and jewellery exports, has conducted an analysis highlighting trade imbalances. Their study shows that while polished and lab-grown diamonds imported into the US from India face zero duty, the same items imported into India from the US are subject to a 5% import tariff, suggesting a case for reducing India’s duty. For plain gold jewellery, the US applies a 7% duty, whereas India’s import duty stands significantly higher at 20%. The GJEPC has formally requested the Indian government to lower this 20% jewellery import duty.

To help balance the trade deficit, the council has also asked the government to consider offering the US a duty concession on the import of gold and silver bullion under a proposed treaty, similar to the arrangement with the UAE under the Comprehensive Economic Partnership Agreement (CEPA). In exchange, they suggest the US could reduce its potential blanket tariff (possibly 10%) to ease the burden on Indian gem and jewellery exports.

Beyond the tariff concerns with the US, the real diamond export sector is also grappling with internal issues, including pressure from bank debts, rising costs, and pricing challenges, which have led some cutting and polishing units to reduce employee salaries. Addressing these difficulties, the exporters’ body has appealed to banks to allow extensions for loan and installment repayments until the tariff situation is resolved and exports rebound.

This situation underscores the complexities facing the Indian gems and jewellery sector as it navigates international trade dynamics and seeks government support to maintain its competitiveness and stability.

Source – Fieo