GST cut, festive demand may cushion $10 billion tariff blow for jewellers
While exports face headwinds, the ongoing festive season in India could provide some relief to the gems and jewellery sector. The $85-billion domestic market, supported by the reforms in the Goods and Services Tax (GST), could help offset part of the losses abroad as exporters shift focus inward.
"The domestic $85-billion jewellery market offers a safety net, provided we sharpen price competitiveness and expand distribution. GST corrections on inverted duties help, and while high-end jewellery has strong domestic potential, actual demand hinges on pricing and consumer sentiment,” says Vipul Shah, Past Chairman of the Gem and Jewellery Export Promotion Council (GJEPC).
Sabyasachi Ray, Executive Director, GJEPC agrees that while domestic absorption capacity varies by sector and product segment, India’s jewellery market can absorb some of this share if issues around price-competitiveness and distribution are addressed.
“Also, for diamonds and high-end gold jewellery, India offers a strong market, but sales also depend on price and consumer sentiment. The GST Council’s moves to correct inverted duties and reduce GST on a range of consumer inputs will free up a lot of disposable income for consumers and will improve that possibility,” Ray said.
This is crucial at a time when the United States has doubled the tariff on Indian gems and jewellery to 50 percent, impacting nearly $10 billion worth of exports to America, with diamonds alone accounting for $7–8 billion.
The effective tariff rate for gems and jewellery will surge to 52.1 percent for the American market, impacting major hubs in Surat, Mumbai, and Jaipur, where the industry employs millions in cutting, polishing, and manufacturing. The sector is India’s fifth-largest export item, with goods worth nearly $30 billion shipped to key markets in FY25.
Colin Shah, MD, Kama Jewelry says the decline in demand from the United States surely is a challenge, but the domestic market in India can absorb some of the exports produced.
India’s festive season that is currently underway since Ganesh Chaturthi leading into Diwali in October could ease the blow of Trump’s tariffs, but not by a lot.
