Exports of Indian natural polished diamonds to the US – contributing 35 per cent of total exports in fiscal 2025 – is set to face further headwinds following the tariffs and penalty announced by the US, said Crisil Ratings officials.
An official of the ratings agency noted that the demand for natural diamonds in the US market has slowed already.
“Added to this, reduced offtake by retailers post announcement of 10 per cent tariff on Indian exports in April 2025, brought down the share of the US in polished diamond exports to 24 per cent in the first quarter of this fiscal from 37 per cent for the same period last fiscal,” said Rahul Guha, Senior Director at Crisil Ratings. “In the milieu, the revenue of Indian diamond polishers can decrease a further 20-25 per cent this fiscal to $10-11 billion,” Guha added.
Himank Sharma, Director, Crisil Ratings, said, “Natural diamond polishers, traditionally operating at thin margins of 4-5 per cent, will have limited ability to absorb the tariff-induced price rise. As a result, miners and retailers may need to step in to absorb some of the price shocks.”
In fiscal 2025, the export volumes of natural diamonds remained constrained by lower demand from China and competition from LGD in the US. Although polishers pushed sales in the fourth quarter to avoid tariffs, and price erosion was limited, revenues from natural diamond exports fell 17 per cent to $13.3 billion.
India is the top global exporter of diamonds and the largest consumer of gold.
Stakeholders of the Indian Gems and Jewellery sector expressed deep concern, warning of short-term disruptions, potential job losses, and rising prices for American consumers following the US announcement of a 25 per cent tariff on India, which was announced by US President Donald Trump on July 30. Trump also said India will face additional penalties for purchasing oil from Russia.
However, business leaders also pointed to India’s expanding trade ties, including recent Free Trade Agreements (FTAs) with the UK, Australia, and the UAE, as a buffer against the fallout, suggesting the long-term impact may hurt the US more than India.