India's Diamond Dilemma: Tariffs and Competition Threaten Industry

India's natural diamond polishing industry is facing a significant downturn due to a new 50% tariff on exports to the US, leading to an expected revenue fall to USD 12.50 billion. The industry struggles with decreasing demand, competition from lab-grown diamonds, and geopolitical challenges impacting profitability and credit profiles.

India's diamond polishing industry is grappling with major challenges as a sharp 50% tariff on exports to the United States takes effect. This financial year, revenues are anticipated to plummet by 28-30%, settling at around USD 12.50 billion, as revealed in a recent report by Crisil Ratings.

The latest tariff implementation is an outcome of US penalties on India for procuring Russian oil, compounding the previous 25% tariff established under the Trump administration. Originally, in 2024-25, the industry reported revenues of approximately USD 16 billion, but declines in diamond demand from major markets like the US and China, along with fierce competition from lab-grown diamonds, have contributed to a downturn.

Crucially, 80% of the industry's revenue stems from exports, with a significant portion directed toward the US. Amidst these financial pressures, Indian diamond polishers are urged to explore alternative markets, increase domestic sales, and adapt to the evolving global tariff landscape to sustain their operations.