The recent U.S. decision to slap an additional 25% tariff on Indian diamond imports has sent shockwaves through Surat’s diamond industry. With Christmas—a critical sales period—just five months away, manufacturers and exporters are grappling with uncertainty and deep concern over what this means for their business.
Tariffs Threaten to Shatter Surat’s Diamond Export Momentum
Surat, known as the diamond polishing capital of India, has long enjoyed robust trade ties with the U.S., the largest consumer market for non-industrial diamonds. But that bond is now facing a serious strain. The new tariff hike, announced by President Donald Trump, has forced many diamond exporters to halt or rethink orders just as the festive season sales window approaches—a period that typically accounts for nearly half the year’s sales revenue.
The Gems & Jewellery Export Promotion Council (GJEPC) data reveals that India supplied 68% of the volume and 42% in value—about $5.79 billion worth—of total U.S. diamond imports in 2024. This dominant position underscores how crucial the American market is for Surat’s diamond economy. Yet, the 25% tariff now threatens to erode this hard-earned market share.
Hitesh Patel, director of Dharmanandan Diamonds Pvt Ltd, one of Surat’s leading players with a turnover of around Rs 7,000 crore, shared a grim forecast. He said exports to the U.S. have already dropped by about 25% over the past couple of years, and factory production has shrunk by 30-35%. “With these new tariffs, exports will crash further,” he warned.
Interestingly, Israel, the second-largest diamond exporter to the U.S., accounting for 28% in value, faces a lower tariff of just 19%. This uneven playing field only adds to the challenge Surat’s exporters are now facing.
Factories Slow Down, Orders Put on Ice as Christmas Sales Loom
You can almost feel the tension on the factory floors of Surat. What was once a bustling hive of activity has slowed considerably in recent years. Now, with the tariff news, many companies have hit pause on orders from American buyers.
Patel explained how companies had started receiving early Christmas orders from the U.S., only to have those deals put on hold or reconsidered after the tariff announcement. This pause isn’t just a blip — Christmas sales make up nearly 50% of the annual turnover in international diamond markets. So, a disruption now could spell disaster.
The uncertainty surrounding the tariffs is causing frustration and anxiety. “We are waiting anxiously for August 27, when the 50% tariff kicks in, to see if any relief or negotiation will happen,” Patel added. “If not, we will have to find ways to renegotiate with our U.S. buyers or suffer significant losses.”
Small and medium enterprises, which form the backbone of Surat’s diamond industry, are especially vulnerable. Many don’t have the financial cushion to absorb such shocks, leading to fears of factory closures and job losses.
Government Support and Market Adaptations: What’s Next?
Industry leaders are turning to the government, hoping for some form of relief or diplomatic intervention. There’s a growing chorus asking for policies that could ease the blow—either through negotiations with U.S. trade officials or support measures like subsidies and export incentives.
In addition to government support, companies are exploring new strategies to cope with the tariff impact:
-
Diversifying export markets beyond the U.S. to reduce dependence.
-
Investing in value-added services like branding and certification to justify higher prices.
-
Enhancing local manufacturing efficiencies to cut costs.
A table below compares key figures related to diamond imports into the U.S. by country, showing the stark tariff differences that influence market competitiveness.
| Country | Share in US Diamond Imports (Value) | Current Tariff Rate |
|---|---|---|
| India | 42% ($5.79 billion) | 25% (recently increased to 50%) |
| Israel | 28% | 19% |
| Belgium | 12% | 0-5% (varies) |
| Others | 18% | Varies |
Many in the industry believe that U.S. diamond buyers will bear some of the burden because Indian exporters cannot simply absorb such high tariffs without hiking prices. However, whether American clients will accept increased costs remains an open question.
The next few weeks will be critical. The industry’s future depends on how effectively stakeholders manage to respond to these sudden trade barriers and whether diplomatic efforts can reverse or soften the tariff hikes.
A Fragile Future for Surat’s Diamond Industry?
The diamond business in Surat has always been a mix of resilience and adaptability. Still, this tariff shock arrives at a precarious time. With production already down, orders delayed, and factories slowing, the community is bracing for tough times ahead.
In many ways, Surat’s diamond sector mirrors larger trade tensions and the vulnerability of export-dependent industries in a globalized economy. It’s a reminder that shifts in trade policies ripple far beyond Washington’s corridors, reaching deeply into local economies and impacting thousands of livelihoods.
Only time will tell if Surat’s diamond hub can weather this storm or if the tariffs will leave a lasting dent on one of India’s glittering export jewels.
