Trump’s reciprocal tariff could hurt India’s Gems and Jewellery Sector

According to experts, the US government's decision to apply a reciprocal duty of 26% on Indian imports is anticipated to have a major effect on India's gem and jewelry industry. In FY24, India exported $9.9 billion worth of gems and jewelry to the US, accounting for 12.8% of total exports. 

On April 2, US President Donald Trump declared the new duty, claiming it was roughly half as high as India's 54% tariff on US imports. With effect from April 5, the 26% tax will be in addition to the baseline 10% tariff on all imports. In FY24, goods trade between India and the US was $77.52 billion, with apparel, engineering goods, electronics, pharmaceuticals, and gems and jewelry accounting for 72.7% of the total. 

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As per Kirit Bhansali, chairman of the Gem and Jewellery Export Promotion Council, "the [gems and jewelry] trade is expected to come to a standstill as US importers will assess whether to place orders with Indian jewelry exporters." 

In India, he continued, gold and diamond jewelry are seen as investments, whereas in the United States, they are luxury items. As a result, demand in the US is probably going to decrease if prices increase. According to experts, the US tariffs will have the most effect on exporters of diamond and studded gold jewelry. First, according to Anup Zaveri, a partner at the diamond maker Real Illusion LLP, the 26% levy will be difficult for the US buyer to pay, which will result in less exports from India. 

Exporters would need to determine the duty on particular commodities, like loose diamonds and gold-studded objects, he continued. According to a report released on March 26 by Emkay Institutional Equities, cut and polished diamonds made up the greatest portion of India's overall gem and jewelry exports to the US in FY24, accounting for 57% of the total. 27% of these exports were jewelry made of studs of gold. The remainder was made up of ordinary gold jewelry, lab-grown diamonds, and silver jewelry, all of which contributed relatively little.

Affected exporters 

Major exporters including Rajesh Exports, Vaibhav Global, and Goldiam International are anticipated to be impacted by the levies. However, businesses like Titan and Kalyan Jewellers that rely less on US exports are probably going to be less impacted.

Vaibhav Global stock price dropped more than 4% on Thursday, while Goldiam International stock price dropped as much as 10% on the BSE. Before rebounding, Rajesh Exports share price saw a 3.2% decrease. On April 2, Trump declared that reciprocal tariffs will not be applied to industries including minerals, semiconductors, copper, timber products, gold, pharmaceuticals, or energy. Later on, sector-specific levies will also be applied.

સારાંશ આપવા માટે

The gem and jewelry industry, which accounted for 12.8% of India's exports to the US, will be greatly impacted by the US's announcement of a 26% tariff on Indian imports. It is anticipated that this increased tariff will trouble the major exporters such as Vaibhav Global and Goldiam International.