U.S. Tariff Hike to Hit Indian Diamond Industry: Revenue May Fall 30% in FY25, Says CRISIL

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CRISIL warns that Indian diamond polishers may face a 28-30% revenue decline in FY25 due to U.S. tariff hikes. Learn how this impacts India’s $23B diamond export sector.

U.S. Tariff Hike to Cut Indian Diamond Polishers’ Revenue by 28-30% This Fiscal: CRISIL

The Indian diamond polishing industry, one of the crown jewels of the country’s export sector, is staring at a sharp decline in revenue this fiscal year after the United States imposed higher tariffs on polished diamond imports. According to a recent CRISIL report, Indian diamond polishers are expected to face a 28-30% fall in revenue in FY25, marking one of the steepest declines in recent years.

Why the U.S. Tariff Hike Matters

The United States is the largest market for Indian polished diamonds, accounting for nearly 40% of total exports. India processes about 90% of the world’s rough diamonds, mainly in Gujarat’s Surat, before re-exporting them as finished products.

With the U.S. government increasing tariffs on polished diamonds, the competitive edge of Indian exporters is set to erode. Buyers may increasingly turn to alternatives such as Belgium, UAE, and domestic cutting centers in the U.S.

CRISIL’s Warning: A Significant Blow

CRISIL estimates that revenues of Indian diamond polishers could shrink by 28-30% in FY25, translating to a loss of billions in foreign exchange. This downturn is expected to impact not only exporters but also ancillary industries such as polishing units, transport services, and jewelers.

The rating agency notes that small and mid-sized polishers are especially vulnerable, as they operate on thin margins. The industry, which employs over 1 million workers in Surat alone, could see rising unemployment if demand continues to weaken.

Global Demand Challenges Add Pressure

The tariff hike comes at a time when global demand for diamonds is already subdued. Economic uncertainty, inflationary pressures in the U.S., and changing consumer preferences toward lab-grown diamonds are putting additional stress on the sector.

CRISIL highlights that lab-grown diamonds (LGDs) have grown in popularity, especially in the U.S., because of their affordability and ethical sourcing. This trend further threatens the traditional natural diamond export business of India.

Possible Impact on India’s Export Earnings

India’s polished diamond exports stood at nearly $23 billion in FY24. A 30% drop would bring this figure down significantly, weakening overall merchandise exports and adding pressure to India’s trade balance.

The Gems and Jewellery Export Promotion Council (GJEPC) has already raised concerns and is in talks with the government to explore relief measures. Exporters are urging policymakers to negotiate with U.S. authorities and push for tariff relaxations to protect the sector.

Industry Response and Adaptation

To mitigate the impact, Indian diamond polishers may adopt several strategies:

  • Diversifying Markets: Expanding into Europe, the Middle East, and Asia to reduce dependence on the U.S. market.
  • Boosting Lab-Grown Diamonds: Investing in LGD production, which is gaining acceptance in global markets.
  • Value-Added Exports: Shifting from raw polished stones to jewelry exports, where margins are higher.
  • Automation & Efficiency: Adopting modern cutting and polishing technologies to improve productivity and reduce costs.

The Road Ahead

The U.S. tariff hike poses a serious short-term challenge, but it also signals the need for India’s diamond industry to reinvent itself. By embracing new markets, products, and technologies, the sector can minimize risks and stay globally competitive.

However, unless there is some relief on tariffs or a rebound in global demand, FY25 is expected to be a difficult year for Indian diamond polishers.

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