Indian Diamond Industry Struggles Amid Steep US Tariffs, Export Slump

India's diamond industry faces a slump in exports, with business slowing down due to weak Chinese demand and looming US tariffs. Orders are drying up, and some exporters plan to shift operations to countries like Botswana to cushion the blow. The Surat Diamond Bourse, the world's largest office complex, stands idle with only a few traders at work. The US tariffs, set to double on Aug. 27, threaten to sever access to the largest market for India's $28.5 billion annual shipments.

The Indian diamond industry, once a global powerhouse, is currently facing significant challenges due to weak Chinese demand and impending U.S. tariffs. The Surat Diamond Bourse, the world's largest office complex, stands eerily quiet, with only a few traders at work. This slowdown is a stark contrast to the usual bustling activity during peak seasons, particularly ahead of Christmas and New Year.

The primary driver of this slump is the anticipated doubling of India's 25% tariff to 50% on Aug. 27, as part of U.S. President Donald Trump's trade policies. This looming tariff increase is expected to severely impact India's diamond exports, which have already hit a two-decade low due to weak Chinese demand. The U.S. accounts for nearly a third of India's $28.5 billion annual shipments of gem and jewelry, making it the largest market for Indian diamonds [1].

To mitigate the impact, some larger exporters are considering shifting part of their operations to countries like Botswana, which faces a lower 15% U.S. tariff. Hitesh Patel, managing director of Dharmanandan Diamonds, expects U.S. tariffs to slash his company's annual revenue by 20-25% [1]. Meanwhile, smaller exporters are cutting working days and hours and offering steep discounts to stay afloat.

The Surat Diamond Bourse, with its 4,700 offices sold but less than 250 in use, is a testament to the industry's current predicament. Prime Minister Narendra Modi had hailed the complex as a symbol of "new India's strength and new resolve" during its inauguration in December 2023, but the reality is far from the envisioned bustling hub [1].

While the industry is trying to boost sales to Asia, Europe, and the Middle East to offset U.S. losses, finding new diamond buyers is proving challenging. The only silver lining is the continued growth in India's domestic demand, which has recently overtaken China as the world's second-largest market [1].

The industry is cutting rough diamond purchases and operating with minimal inventories to preserve cash flow, while cash-strapped smaller units have begun offering deep discounts to stay afloat. The situation is grim, with industry officials estimating that 150,000 to 200,000 workers could lose their jobs in the absence of a trade deal between India and the U.S. to lower tariffs [1].

References:

[1] https://www.reuters.com/world/india/empty-offices-lost-orders-indias-diamond-hub-stands-idle-steep-us-tariffs-loom-2025-08-26/