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 Trump’s reciprocal tariffs spark job loss fears in GJ sector

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The U.S. government’s move to impose reciprocal tariffs has sent ripples of concern through India’s gem and jewellery sector, a vital component of the nation’s economy. Here’s a breakdown of the key issues and implications:

The Core Issue: Reciprocal Tariffs and Trade Imbalance

Unequal Tariff Structures: The heart of the issue lies in the perceived imbalance in tariff structures between the U.S. and India. India currently levies a 20% tariff on gold jewellery imported from the U.S., while the U.S. applies a significantly lower duty of 5.5-7% on Indian gold jewellery. Similarly, India imposes a 5% tariff on cut and polished diamonds, whereas the U.S. has historically maintained zero tariffs on these Indian exports. This discrepancy has prompted the U.S. to consider reciprocal tariffs, aiming to create a more level playing field.
Potential Impact on Exports: The U.S. is a critical market for Indian gem and jewellery exports. Any increase in U.S. tariffs would directly raise the cost of Indian products for American consumers, potentially reducing demand and negatively impacting export volumes.
Key Export Categories at Risk: The primary export categories facing potential disruptions include:
• Cut and polished diamonds: A major export segment, historically enjoying tariff-free access to the U.S. market.
• Studded gold jewellery: A significant contributor to export revenue.
• Plain gold jewellery: Another essential export commodity.
• Lab-grown diamonds: A growing sector within the Indian gem and jewellery industry.

Economic and Social Implications for India

• Impact on Export Revenue: A decline in gem and jewellery exports would directly affect India’s foreign exchange earnings.
• Employment Concerns: The industry is a significant employer, providing livelihoods to over two million people, with a substantial portion being women and individuals from economically disadvantaged backgrounds. Tariff-induced disruptions could lead to job losses and economic hardship for these vulnerable populations.
• Industry Vulnerability: While not the single largest export driver, the gem and jewellery sector holds a vital position in India’s economy. Its labor intensive nature, and the high value of its exports makes it very important.
• Trade Relations: The tariff issue has the potential to strain trade relations between India and the U.S., potentially impacting other areas of economic cooperation.

Factors to Consider

• Market Dynamics: The extent of the impact will depend on the magnitude of the tariff hikes and the ability of Indian exporters to absorb the increased costs or find alternative markets.
• Negotiations: The outcome will also depend on the results of ongoing or future trade negotiations between the two countries.
• Lab-grown Diamonds: The lab-grown diamond market is fairly new, and very dynamic. Any tariff changes could drastically alter the market share of Indian companies in the United States.
In essence, the potential imposition of reciprocal tariffs by the U.S. poses a significant challenge to India’s gem and jewellery industry, with potential ramifications for export revenue, employment, and overall economic stability.

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National News

Outstanding gold-backed loans  surge by  128% from a year earlier

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India’s appetite for borrowing against gold is reshaping the country’s credit landscape. Outstanding gold-backed loans have surged 128% from a year earlier, crossing Rs.4 lakh crore ($48 billion) for the first time, according to data from the Reserve Bank of India. As of Jan. 31, loans secured by gold jewellery stood at Rs.4,00,517 crore, marking one of the fastest expansions in retail credit in recent years.

The boom in gold loans has helped propel overall non-food bank credit growth to 14.4% year-on-year. Personal loans now account for 34.5% of total bank lending, outpacing other segments and underscoring a broader shift toward consumer-driven credit expansion

Gold loans alone contributed roughly 9% of incremental bank credit during the period. Between January 2024 and January 2026, outstanding gold-backed credit rose by nearly Rs.3.1 lakh crore—an increase of about 338% over two years—more than quadrupling the size of the portfolio.

Two factors are driving the surge. First, gold prices have climbed roughly 152% over the past two years, increasing the collateral value of household holdings. Second, regulatory guidance requiring banks to classify loans secured by gold explicitly as gold loans has sharpened reporting and accelerated balance-sheet growth in the segment.

The trend highlights a distinctive feature of India’s financial system: households’ vast stock of physical gold, long viewed primarily as a store of wealth, is increasingly being mobilized as collateral for formal credit.

While personal lending and credit to nonbank financial companies within the services sector continue to expand rapidly, industrial credit remains uneven. Loans to micro, small and medium enterprises are growing steadily, but borrowing by large corporations has stayed relatively muted.

Since March 21, 2025, banks have added Rs.21.8 lakh crore to their non-food loan books, translating into 12% growth for the financial year to date. Yet it is gold—rather than factories or infrastructure—that is emerging as one of the most dynamic engines of India’s current credit cycle.

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