Trump Tariffs Batter Gujarat’s Diamond Industry

India-West News Desk

MUMBAI-A diplomatic standoff over India’s energy purchases from Russia has escalated into a trade war, with significant economic consequences for the Indian subcontinent. The repercussions are being felt most acutely in Gujarat, where punitive tariffs imposed by the United States have led to the loss of nearly 100,000 jobs in the diamond cutting and polishing sector.

The American action comes as President Donald Trump’s administration has levied escalating duties on Indian diamonds. The tariffs, which started at 10% in April, surged to 50% in August. Industry experts say this sharp increase, which saw duties double in the last ten days, is a direct response to India’s continued sourcing of energy from Russia. As a result, US buyers are either postponing or canceling orders, creating a crisis for Indian exporters.

The fallout has been devastating for India’s diamond industry. 

The Saurashtra region of Gujarat, home to small-scale units in cities like Bhavnagar, Amreli, and Junagadh, has been hit the hardest. These operations, which employ hundreds of thousands of workers, were already struggling with sluggish demand from the US and China. 

Now, with order volumes plummeting, companies have been forced to lay off workers who earn between ₹15,000 and ₹20,000 a month, several Indian media reports say. While some displaced workers are attempting to transition into the lab-grown diamond (LGD) industry, experts caution that this sector is also heavily reliant on the US market and faces the same 50% tariff, risking further job losses.

In the face of the downturn, industry bodies have urged the central government to take decisive action. They are pushing for fast-tracked trade talks with Washington, enhanced export incentives, and accelerated GST refunds. 

The future is uncertain for the approximately 800,000 workers in Surat, India’s largest diamond hub, especially as some buyers looking for less pricey items from Vietnam and Thailand, which currently benefit from lower tariffs.