India’s $32 billion gems and jewellery industry is gearing up for a sharp decline in exports as the imposition of hefty U.S. tariffs is expected to disrupt sales to its largest market, officials say. The United States recently imposed a 26% reciprocal tariff on India, marking a significant setback to the country’s export ambitions under President Donald Trump’s global trade policy.

“The tariff is higher than expected,” said Colin Shah, managing director of Kama Jewelry, one of India’s leading diamond jewellery manufacturers. “It is quite severe and will affect exports.”

India remains the world’s largest hub for diamond cutting and polishing, processing nine out of every ten diamonds globally. The United States accounts for nearly $10 billion—or 30.4%—of India’s annual gems and jewellery exports.

Despite its importance, the gems and jewellery sector, India’s third-largest export to the U.S. after engineering and electronics, is already struggling. The industry employs millions in India and has seen a recent downturn due to weak demand from China, resulting in a 14.5% drop in exports to $32.3 billion in the 2023-24 fiscal year.

However, industry leaders remain optimistic that a long-term bilateral trade deal with the U.S. could alleviate some of the negative impact. “We’re pretty hopeful that India could land a trade deal with the U.S. in the next few months. So, we just need to push through this tough phase for a little while longer,” said Shaunak Parikh, vice chairman of the Gem and Jewellery Export Promotion Council (GJEPC).