Surat: The US government’s decision to impose a 27% reciprocal tariff on Indian exports is expected to have a severe impact on Surat’s textile and diamond jewelry industry.

The US has withdrawn the Most Favored Nation (MFN) status granted to India in the gem and jewelry sector and has imposed tariffs of 27% on cut and polished diamonds, 27% to 34.4% on polished lab-grown diamonds and synthetic stones, 32% to 34% on gold and platinum jewelry, 32% to 40.5% on silver jewelry, 30% to 34.9% on gold articles, 29.7% to 30.5% on silver articles, 27% on pearls, and 27% to 38% on imitation jewelry.

Additionally, the 26% to 37% reciprocal tariff on the man-made fiber (MMF) industry, home textiles, knitting, and garment industries is expected to reduce exports to the US. If the supply of fabrics from Surat is disrupted, the textile industry could face further challenges.

Industry leaders are closely monitoring the situation ahead of the April 9 implementation date, while an initial 10% tariff takes effect on April 5. Previously, cut and polished diamonds from India were subject to zero tariffs.

As the world’s leading manufacturer of cut and polished diamonds, responsible for polishing nine out of ten diamonds globally, India is poised to bear the brunt of the new tariff. Industry stakeholders remain hopeful that diplomatic negotiations may lead to a resolution before the tariff is enforced.

“A 10% base tariff will come into effect from April 5 as an ad hoc measure, while the full 27% tariff will be implemented from April 9 unless a trade agreement is reached,” an industry expert explained.

The Gem and Jewellery Export Promotion Council (GJEPC) issued a statement, saying, “The reciprocal tariffs announced by US President Donald Trump on India’s gem and jewelry trade will have a direct impact on the sector. Like other countries, India’s gem and jewelry industry is analyzing the global economic shifts caused by these tariffs. The 26% reciprocal tariff imposed by the US on Indian gem and jewelry exports will place a significant burden on both Indian exporters and American consumers. While tariffs on competing nations create both challenges and opportunities, they are expected to have a major impact on India’s gem and jewelry sector, which is a key pillar of exports to the US.”

Industry experts warn that India, as the largest producer of cut and polished diamonds, will be significantly affected if negotiations fail. Currently, the US imposes a 0% tariff on Indian cut and polished diamonds, while India levies a 5% tariff on US imports. Another key concern is studded gold jewelry exports, a crucial segment of India’s gem industry. India charges a 20% tariff on US gold jewelry imports, whereas the US levies only 5.5% on Indian imports.

Meanwhile, Kailash Hakim, President of the Federation of Surat Textile Trade and Traders Association (FOSTA), told reporters that the US reciprocal tariff will have a direct impact on Surat’s textile industry, where tariffs will increase from 7% to 37% from April 9. The additional 30% tariff will have a widespread effect on textile traders in Surat, who supply fabrics to India’s garment and home furnishing industry. Textile traders exporting directly from Surat will also be affected. FOSTA plans to submit a proposal to the central government to seek a resolution on this matter.

The Southern Gujarat Chamber of Commerce and Industry (SGCCI) President Vijay Mewawala has urged Union Commerce and Industry Minister Piyush Goyal to provide tariff subsidies for the gems, jewelry, and textile industries and to expedite the Foreign Trade Agreement (FTA) with the US.

Mewawala emphasized the urgency of an FTA in key sectors such as gems and jewelry, textiles, automobiles, IT, pharmaceuticals, chemicals, and solar modules for India, while the US is keen on high technology, robotics, automobiles, and advanced manufacturing.

He also highlighted the trade imbalance between the two nations. In 2024, total bilateral trade between India and the US stood at $129.2 billion, with India importing $41.8 billion worth of US goods while exporting $87.4 billion worth of goods to the US. He noted that this trade deficit was a key concern for the US, leading to the implementation of reciprocal tariffs. DeshGujarat