India and the US are reportedly edging towards a trade deal that could wipe out the 50 per cent tariff on natural diamonds. Sergio Gor, the new US ambassador to India, said both sides were actively engaged on trade deal negotiations during his trip to Delhi on January 12, 2026 – just days after arriving in India.Recent diplomatic developments between India and the United States suggest significant progress toward a comprehensive trade agreement that could eliminate the current 50% tariff on natural diamonds.

The United States has imposed reciprocal tariffs on Indian diamond imports as part of broader trade tensions. These tariffs were initially set at 25% before being increased to 50%, representing a punitive measure designed to address trade imbalances and encourage bilateral negotiations.

India dominates the global diamond cutting and polishing industry, processing approximately 90% of the world’s diamonds by volume. The US represents India’s largest export market for cut and polished diamonds, making this tariff particularly damaging to Indian manufacturers and the broader diamond supply chain.

US Ambassador to India Sergio Gor has signaled active engagement in trade negotiations during his early January 2026 visit to Delhi. His comments emphasize the personal relationship between President Trump and Prime Minister Modi as a foundation for resolving trade differences. The scheduling of negotiators’ calls and the ambassador’s public statements suggest both governments view a trade deal as achievable in the near term.

Notably, Gor has pushed back against suggestions that India is responsible for delays in negotiations, indicating that both sides share responsibility for moving talks forward constructively.

De Beers leadership has expressed optimism about tariff elimination. Al Cook’s statement that negotiated deals would result in 0% tariffs on natural diamonds provides concrete evidence that diamond tariffs are specifically addressed in ongoing discussions. His meetings with Indian Commerce Minister Piyush Goyal further demonstrate that diamond trade is a priority topic at the highest levels of government.

Potential Implications

For Indian Diamond Manufacturers: Tariff elimination would restore competitiveness in the US market, potentially recovering the lost export volume documented by De Beers. Indian cutting and polishing operations could resume normal production levels and recapture market share that may have shifted to alternative suppliers or remained with rough diamonds during the tariff period.

For US Retailers and Consumers: Lower import costs would translate to reduced retail prices or improved margins for jewelers. Consumer demand could increase as diamond jewelry becomes more affordable, potentially stimulating the broader luxury goods market.

For Global Diamond Supply Chain: Normalized trade flows between India and the US would stabilize the diamond pipeline, reducing uncertainty for miners, manufacturers, and retailers. De Beers and other mining companies would benefit from restored demand for rough diamonds as Indian processors increase production.

For Competitors: Diamond manufacturing centers in other countries that may have gained temporary advantages during the tariff period could face renewed competition from lower-cost Indian producers.

Risk Factors

While progress appears genuine, several risks remain. Trade negotiations are complex and subject to political considerations beyond the diamond industry. Unexpected diplomatic tensions, domestic political pressures in either country, or disputes over non-diamond trade issues could derail or delay an agreement.

Additionally, the timeline for implementation remains unclear. Even if negotiators reach an agreement in principle, the administrative process of reducing tariffs may take months, prolonging uncertainty for businesses making inventory and investment decisions.

The convergence of diplomatic statements from the US ambassador, industry assessments from De Beers leadership, and high-level governmental engagement suggests a genuine possibility that India-US trade negotiations will successfully eliminate diamond tariffs. The business case for such an outcome is compelling given the documented damage to trade flows and the relative simplicity of the diamond tariff issue compared to broader trade complexities.

However, stakeholders should maintain measured expectations and prepare for multiple scenarios while negotiations continue. The difference between diplomatic progress and finalized agreements can be substantial, and businesses must balance optimism with prudent risk management until a deal is formally concluded and implemented.