- US tariffs of 25-27% on Indian gems and jewellery, effective April 2025, with a further 25% tariff threatened from August 1, 2025, may reduce US demand by 30-50%.
- Jaipur’s 150,000 gemstone cutters and 300,000 workers face potential job losses, with over 100,000 jobs at risk nationwide.
- Tariffs could shift orders to competitors like Thailand and Vietnam, impacting Jaipur’s market share.
- Industry leaders are pushing for a US-India trade deal and exploring markets like the UK and UAE, but outcomes remain uncertain.
Impact on Jaipur’s Jewellery Market
The US tariffs could significantly disrupt Jaipur’s jewellery and stone market, a global hub for colored gemstones and handcrafted jewellery. Research suggests a sharp decline in exports to the US, which accounts for $9.95 billion of India’s $32.85 billion gems and jewellery exports. This could lead to job losses for Jaipur’s artisans and reduced competitiveness against countries with lower tariffs. Industry efforts to diversify markets and negotiate trade deals offer hope, but the situation remains fluid.
Export Decline
The 25-27% tariffs, with a potential 25% blanket tariff from August 1, 2025, may cut US demand by 30-50%, affecting Jaipur’s $10 billion export market. Orders are already on hold, as noted by industry leaders.
Job Losses
Jaipur’s 150,000 gemstone cutters and 300,000 workers are at risk, with estimates of over 100,000 job losses nationwide. Artisans, many from economically weaker sections, face severe livelihood threats.
Competitive Challenges
Higher tariffs make Indian jewellery less competitive compared to Thailand and Vietnam, potentially diverting US orders. Some exporters may route products through Dubai, increasing costs.
Industry Response
The GJEPC is advocating for a US-India trade deal, while exporters explore markets like the UK and UAE. However, these markets may not fully offset US losses, and negotiations are ongoing.
Sources:
- Reuters: With US tariffs, India’s jewellery exports set for sharp decline
- GJEPC: Indian Gem & Jewellery Industry Analyses U.S. Reciprocal Tariff Plan’s Impact
- ETRetail: US 25% Tariff Hits Indian Gems and Jewellery Sector
How US Tariffs Can Reshape Jaipur’s Jewellery and Stone Market in 2025
In the bustling lanes of Jaipur, Rajasthan’s “Pink City,” artisans have long transformed raw gemstones into treasures that dazzle the world. Known for its vibrant colored gemstones—rubies, emeralds, sapphires—and intricate handcrafted jewellery, Jaipur is a cornerstone of India’s $32.85 billion gems and jewellery export industry. Yet, a new challenge looms large: the United States, which absorbs $9.95 billion (30.29%) of these exports, has imposed 25-27% tariffs on Indian gems and jewellery since April 2025, with a further 25% tariff threatened from August 1, 2025. These measures, part of a US trade policy to address tariff imbalances, could profoundly reshape Jaipur’s jewellery and stone market, impacting artisans, exporters, and the city’s economic fabric. This article explores the potential effects, weaving in voices from the industry and key statistics to shed light on what lies ahead for Jaipur’s gem trade.
The Tariff Shock: A Trade Policy Shake-Up
On April 2, 2025, US President Donald Trump announced the “Fair and Reciprocal Plan,” targeting countries with higher tariffs on US goods. For India, this translated into a 25-27% tariff on gems and jewellery imports, a sharp increase from the previous 5.5-7% on gold jewellery and 0% on cut and polished diamonds. A further 25% tariff on all Indian imports, effective August 1, 2025, adds to the pressure. According to the Gem and Jewellery Export Promotion Council (GJEPC), these tariffs could reduce US demand by 30-50%, hitting Jaipur’s export-driven market hard.
Jaipur’s jewellery sector is particularly vulnerable. The city contributes significantly to India’s $9.95 billion in gems and jewellery exports to the US, with a focus on colored gemstones and handcrafted pieces. “Starting tomorrow, I don’t see any exports going to the USA,” said Adil Kotwal, Chairman of the SEEPZ Gems and Jewellery Manufacturers’ Association (SGJMA), in April 2025. “Everybody has told us to put all orders on hold” (CNBC TV18, April 8, 2025). This standstill reflects the immediate impact of the tariffs, as US buyers hesitate to commit to higher-priced goods.
Export Decline: A Blow to Jaipur’s Economy
The US accounts for 30.29% of India’s gems and jewellery exports, valued at $9.95 billion in FY 2023-2024, with Jaipur’s colored gemstones and handcrafted jewellery forming a substantial share. The GJEPC estimates that the tariffs could slash US demand by 30-50%, translating to a potential loss of $3-5 billion in export revenue. For Jaipur, this means cancelled orders and reduced income for small and medium enterprises (MSMEs), which operate on slim 2% profit margins.
Historical data underscores the severity of such trade disruptions. When the US withdrew India’s Generalized System of Preferences (GSP) status in 2007, gold jewellery exports dropped 50% from $2.21 billion to $1.01 billion, taking 15 years to recover (GJEPC). A similar decline could devastate Jaipur’s export market, particularly for colored gemstones, which hold a 45.09% share of the US market for cut and polished diamonds and 24.61% for gold jewellery.
Job Losses: The Human Toll
Jaipur’s gems and jewellery sector employs 150,000 colored gemstone cutters and 300,000 workers overall, many from economically weaker sections, including women. The tariffs threaten over 100,000 jobs nationwide, with Jaipur facing a significant share of these losses. “The proposed reciprocal duties by the US government on Indian gem and jewellery exports, especially coloured gemstones, could severely impact the Jaipur industry,” said Alok Sonkhia and Neeraj Lunawat, President and Secretary of the Jewellers Association Jaipur (JAJ). “The US is our largest market, and increased tariffs would likely drive business to Thailand, which has a more favourable duty structure. This would jeopardise significant US orders and threatens the livelihoods of 150,000 coloured gemstone cutters and 300,000 workers in Jaipur’s overall gems and jewellery sector” (GJEPC).
The ripple effects are already visible in other hubs like Surat, where factory closures and wage cuts have hit the diamond industry. In Jaipur, similar challenges could disrupt the lives of artisans who have honed their craft over generations. “Reciprocal tariffs will be detrimental for India’s gem and jewellery exports as well as U.S. jewellery retail,” said Dinesh Lakhani, Global Director of Kiran Gems Pvt. Ltd. “Small independent retailers in the U.S. and MSME exporters in India—both huge employment generators—will suffer most” (GJEPC).
Competitive Pressures: Losing Ground to Rivals
The tariffs make Indian jewellery less competitive compared to countries like Thailand and Vietnam, which benefit from lower or zero duties on US exports. “Increased tariffs could make Indian exports less competitive compared to destinations like Thailand, Vietnam, and Korea, affecting market share and profit margins,” said Alkesh Shah, Vice Chairman of Goldstar Jewellery (GJEPC). This could divert US orders to competitors, eroding Jaipur’s market share in colored gemstones and handcrafted jewellery.
Some exporters are exploring workarounds, such as routing products through Dubai or Oman to bypass tariffs, but this increases costs and complicates supply chains. Long-term, the tariffs could reshape global supply chains, with manufacturers potentially relocating to countries like Oman, Singapore, or the UAE, which have favorable US trade agreements. Such a shift would reduce Jaipur’s role as a manufacturing hub, impacting local suppliers and logistics networks.
Compounding Challenges
Jaipur’s jewellery industry was already grappling with challenges before the tariffs:
- Weak demand from markets like China, Europe, and the Middle East.
- Competition from lab-grown diamonds, which hold a 92.17% share of the US market for worked lab-grown stones.
- High gold prices, crossing $3,200 per ounce globally and ₹90,000 per 10 grams in India.
These factors, combined with the tariffs, create a perfect storm for Jaipur’s exporters, who face squeezed margins and declining orders.
Seeking Alternatives: New Markets and Strategies
While the US market is critical, Jaipur’s exporters are not standing still. India’s recent Free Trade Agreements (FTAs) with the UK, Australia, and the UAE offer new opportunities. The UK, with zero% duty post-FTA, is a promising market, with exports expected to grow from $1 billion to $4 billion. The UAE and Middle East are also gaining traction, with their duty-free status and strong consumer demand. “We’re optimising costs and strengthening our presence in Europe and the Middle East to diversify risks,” said Colin Shah, Managing Director of Kama Jewelry (GJEPC).
Other potential markets include France, Italy, Switzerland, Jordan, and South Korea, which benefit from lower tariffs via FTAs. However, these markets may not fully offset the US’s scale, which accounts for Rs 83,000 crore (~$10 billion) of India’s jewellery exports (India Today, July 31, 2025).
Hope Through Negotiation
The GJEPC is actively engaging with the Indian government to secure a US-India trade deal to mitigate the tariffs’ impact. “Our industry has already flagged its concerns over US reciprocal tariffs, and we trust our government to address them,” said Kirit Bhansali, Chairman of GJEPC. “With Hon’ble Prime Minister Shri Narendra Modi and Hon’ble Commerce & Industry Minister Shri Piyush Goyal actively engaging in bilateral trade discussions, we are confident that a resolution will be reached to safeguard India’s gem and jewellery exports” (GJEPC).
A temporary 90-day suspension of higher tariffs was announced on April 9, 2025, offering a brief reprieve, but the baseline 10% duty remains (India Briefing, May 30, 2025). Ongoing negotiations could lead to a more permanent solution, but the outcome remains uncertain as of August 1, 2025.
Statistical Snapshot
| Aspect | Details |
|---|---|
| Total Indian G&J Exports | $32.85 billion (FY 2023-2024) |
| US Share | $9.95 billion (30.29%) |
| Jaipur Employment | 150,000 gemstone cutters, 300,000 total workers |
| Job Loss Risk | Over 100,000 jobs nationwide, significant in Jaipur |
| Tariff Rates (Aug 2025) | 25% on all Indian imports (vs. EU 15%, UK 10%, Thailand lower) |
| Export Decline Estimate | 30-50% drop in US demand |
| US Market Shares | Cut & polished diamonds: 45.09%, Gold jewellery: 24.61%, Lab-grown stones: 92.17% |
Source: GJEPC Research Division, DGCIS-FY2024, USITC data 2024
The US tariffs, with their potential to cut exports, threaten jobs, and erode competitiveness, pose a formidable challenge to Jaipur’s jewellery and stone market. Yet, the industry’s response—diversifying markets, exploring new trade routes, and advocating for a trade deal—shows resilience. Jaipur’s artisans, with their centuries-old craftsmanship, remain the heart of this industry. As negotiations continue and exporters adapt, the city’s gem trade faces a critical juncture, but its legacy of beauty and skill endures.
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