India’s jewellery exports set for a sharp decline

India’s $32bn gems and jewellery industry is bracing for a sharp fall in exports as hefty US tariffs will impede overseas sales to its biggest market, industry officials said."The tariff is higher than expected,” Colin Shah, managing director of Kama Jewelry, one of India’s leading diamond jewellery manufacturers, said. "It is quite severe and will affect exports.”India is the world’s largest hub for diamond cutting and polishing, handling nine out of every 10 diamonds processed globally.The US accounts for nearly $10bn or 30.4% of India’s annual gems and jewellery exports of $32bn.Gems and jewellery are India’s third-largest export to the US, after engineering and electronic goods, and the industry employs millions in the country. The sector has already been hit in recent months by weak demand from China and exports dropped 14.5% to $32.3bn in the 2023-24 fiscal year (April-March). A long-term bilateral trade deal with the United States could soften help the blow, Shah said.India and the US are in talks to clinch an early trade deal."We’re are pretty hopeful that India could land a trade deal with the US 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).Meanwhile, Indian exporters said they were disappointed and relieved in equal measure."The tariffs slapped on India are definitely both high and higher-than-expected, which will hurt demand for our exports,” Ajay Sahai, director general of the Federation of Indian Export Organisations, said.But Sahai also pointed out that India was hit with lower levies than manufacturing rivals."Many countries which we compete with globally, including China, Indonesia, and Vietnam etc, have been hit harder than us,” he said.Experts say that India’s future policy responses should also take into account China’s next steps."Asia has been hit much more than India on tariffs,” said Madhavi Arora, chief economist at Emkay Global Financial Services.