A wave of apprehension has enveloped Surat, the diamond polishing center, as substantial U.S. tariffs pose a threat to the nation’s gem and jewelry exports, jeopardizing the livelihoods of countless workers. The United States, which accounts for over 30% of India’s gem and jewelry exports, imposed a 27% reciprocal tariff on April 3, coinciding with a decline in demand from other significant markets, including China, the Middle East, and Europe. Surat, located in Prime Minister Narendra Modi’s home state, is responsible for processing and polishing more than 80% of the world’s rough diamonds, with India processing nine out of every ten diamonds globally, according to Reuters. The bustling diamond market, where over 10,000 traders and brokers convene daily, has come to a standstill as the industry grapples with uncertainty regarding future developments. One trader remarked to Reuters that the current situation is more dire than during the 2008 financial crisis, which was marked by fears of a prolonged economic downturn. While a slowdown will affect all manufacturers, smaller enterprises are anticipated to bear the brunt of the impact.
Gems and jewelry represent India’s third-largest export to the United States, following engineering and electronic goods, and provide employment to millions, including skilled artisans. The bleak business outlook also raises concerns about the future of the Surat Diamond Bourse, inaugurated by Modi in 2023 to generate thousands of new jobs and function as a trade hub. This facility, covering 6.6 million square feet, was heralded as the largest office building in the world, surpassing even the Pentagon. In response to the impending loss of U.S. demand, the industry is exploring alternative markets, although diamond dealers assert that no other country can fully substitute for the U.S. market. Exporters are making frantic efforts to dispatch as many shipments as possible to the United States before the new tariffs take effect, while orders that cannot be fulfilled in time may face cancellation or delays.
