Daijiworld Media Network- New Delhi

New Delhi, Aug 3: The Indian polished diamond export industry, which contributes significantly to the nation’s foreign trade, is bracing for turbulent times following a fresh wave of tariffs and penalties imposed by the United States, Crisil Ratings said on Saturday.

According to officials at Crisil Ratings, exports of natural polished diamonds to the US — a market that accounted for 35% of India’s diamond exports in FY 2025 — are now under serious strain, with demand already on the decline.

"Retailers in the US have significantly reduced offtake after the announcement of a 10% tariff in April 2025, leading to the US share in India’s polished diamond exports falling to 24% in Q1 FY25, down from 37% in the same period last year," said Rahul Guha, Senior Director at Crisil.

He warned that in the current scenario, revenues for Indian diamond polishers could shrink further by 20-25%, bringing earnings down to USD 10–11 billion for the fiscal year.

Adding to this, Himank Sharma, Director at Crisil Ratings, stated that natural diamond polishers — who typically operate on thin profit margins of just 4-5% — will find it hard to absorb the steep tariff-induced price hikes. “Miners and international retailers may now have to share the burden to soften the blow,” Sharma noted.

In FY 2025, overall export volumes were already hit due to sluggish demand from China and increasing competition from lab-grown diamonds (LGDs) in the US. Though Indian polishers front-loaded exports in the final quarter to avoid the anticipated duties, price corrections could not be avoided, leading to a 17% drop in natural diamond revenues to USD 13.3 billion.

India remains the world’s largest exporter of cut and polished diamonds and a dominant player in the global gold consumption market.

Following US President Donald Trump’s announcement on July 30 of a 25% tariff on Indian goods, along with additional penalties over India’s oil trade with Russia, the Indian Gems and Jewellery sector has expressed deep concern. Industry stakeholders are warning of short-term disruptions, potential job losses, and rising costs for American consumers.

Despite the challenges, industry leaders are optimistic about India’s growing global footprint. They cited Free Trade Agreements (FTAs) recently inked with the UK, Australia, and the UAE as positive signs that may offset long-term damage. Some experts argue that the US might end up facing a greater setback in the long run due to price pressures and reduced supply.