For Kalpesh Patel, Diwali, a festival of light celebrated across India, may mark the lights of his eight-year-old diamond cutting and polishing units.
The 35-year-old employs around 40 workers who convert rough diamonds into completely refined gems at a small factory in Surat, a city in western Gujarat.
His business has survived multiple speed bumps in recent years. But President Donald Trump’s 50% mammoth tariff on imports from India could be the last nail in his troops, part of the natural diamond industry, which is already struggling with.
“We still have some orders for Diwali and we’ll try to complete them,” he told Al Jazeera.
Diwali, perhaps the only biggest festival in India scheduled for late October this year, is usually in the surge in domestic sales of most products. “However, exporters may have to close their businesses even before the festival, as exporters may cancel their orders due to high tariffs in the US,” Patish said.
“It’s becoming increasingly difficult to pay your salary and maintain other expenses with lower orders.”
He is one of Surat’s 20,000 small and medium-sized traders known as “Diamond City of India,” and cuts and polishes 14 of the 15 natural diamonds produced globally.
The US is their biggest export market. According to the Indian industry pinnacle, the GEM and Jewellery Export Promotion Council (GJEPC), between 2024 and 25, which ended in March, $4.8 billion worth of cuts and refined gems were exported to the US from 2024 to 2025. This is more than a third of India’s total exports of cut and polished diamonds, at $13.2 billion over the same period.
Kolkata-based diamond exporter Dimple Shah told Al Jazeera that orders have already begun to be cancelled. “US buyers have refused to offload shipped products, citing high tariffs. This is the worst stage of their career two years ago at Diamond.”
The US will impose a penalty
The 25% mutual tariff on all Indian goods announced by Trump on April 2 came into effect on August 7 after consultations between the two countries had not been able to win a trade contract by then. Negotiations continue.
Meanwhile, on August 6, Trump announced an additional 25% tariff, bringing the total tariff rate to 50%. He was called an additional tariff that will come into effect from August 27th as a penalty for the purchase of Russian oil in India as it seeks to encourage the US president to accept a ceasefire in Ukraine.
In the GEMS industry, which already faces existing 2.1% tariffs, effective tariffs are currently at 52.1%.
Ajay Srivastava, founder of the Global Research Trade Initiative (GTRI), a trade research group, calls the Trump government’s additional hikes an act of “hypocrisy,” citing how the US itself continues to trade with Russia and how Russia’s biggest oil buyers — have not faced similar penalties.
“Trump is targeting India out of frustration for rejecting the US border on the Russian-Ukurein conflict and refusing to open up the agriculture and dairy sector,” he adds, referring to US trade talks and demands for greater access to the key Indian economic sector.
But whatever the reason for Trump’s tariffs, they’re already hurting the diamond industry, which is bleeding from multiple hits.
The Diamond Sector was a terrible hit
Over 2 million people are employed in diamond polishing and cutting units in the cities of Surat, Ahmedabad and Rajkot, Gujarat. And many people have already struggled with pay cuts in recent years.
“The pandemic has led to an economic slowdown that has affected Hong Kong and China’s international markets,” Ramesh Jiruliya, president of the Diamond Workers Union in Gujarat, told Al Jazeera. “The Russian-Ukraine War and the Western ban on rough diamond imports from Russia due to the Russian G7 ban also affected our business,” he added.
Russia has historically been the main source of raw diamonds.
Zilriya claimed that 80 diamond workers have been killed in suicide over the past two years due to the economic crisis.
“The international market situation has led to workers’ wages being halved to around Rs 15,000-17,000 ($194) per month, making it difficult to survive in the face of rising inflation,” he said.
Once Trump’s tariffs begin fully, Zilriya fears that up to 200,000 people in Gujarat could lose their livelihoods.
Over 120,000 former diamond sector workers have already applied for benefits. To support families, a allowance of Rs 13,500 ($154) per child was promised by the state government in May to those who have lost their jobs due to sector turmoil in recent years.
But tariffs, pandemics and wars don’t just blame the crisis. The lab-grown diamonds are also slowly eating at the markets of our natural counterparts.
“Unlike natural (diamonds), laboratory-grown diamonds are not mined, but are manufactured in specialized laboratories and priced at only 10% of the natural ones. Even with the natural growing by veteran jewellers, consumer taste has shifted to lab-grown (diamonds), Salimdaganawala magazines.
Decreased exports
In the 2024-25 fiscal year, India imported rough diamonds worth $10.8 billion, down 24.27% from the $14 billion imported in 2023-24, according to statistics from GJEPC.
Similarly, exports of cut and refined natural diamonds saw a 16.75% decline, with exports falling from 2024 to $2.5 billion compared to $16 billion the previous year.
“This move (tariffs) will have a widespread impact on the Indian economy, which can disrupt important supply chains, stagnate exports and threaten thousands of livelihoods. Otherwise, it will be difficult to survive.”
The tariffs could also hurt US jewellers, warned Rajesh Rokde, chairman of the All India Jewelry and Jewelry National Council (GJC), the industry’s national trade federation.
“There are about 70,000 jewellers in the US and we’ll face a crisis when jewelry becomes expensive,” Rokde added.
Domestic solutions?
Traders say the need for time is to increase domestic demand for diamonds and diversify into new markets.
Radha Krishna Agrawal, director of Narayan Das Saraf Jewelers in Varanasi city in northern Uttar Pradesh, said the stronger domestic market would “not only contribute to the local economy, but also create jobs for thousands of people.”
He said tariffs could prove “the blessing of disguise” if it would reduce the dependence of India’s jewellery industry “on other countries.”
Bhansali is expected to reach $130 billion over the next two years as the domestic gem and jewellery market is growing, with Bhansali projected to rise from $85 billion at this time. The industry is also looking for new markets such as Latin America and the Middle East.
Gold has already set an example for the domestic market, mitigating the impact of the hit on exports, according to Amit Korat, president of the Surat Jewellery Manufacturers Association.
But for now, there is no such shield in the Indian diamond sector. There’s an urgent need to be saved, said Patel, the business owner of Surat, who is at the pinnacle of shutting down his polishing and cutting units.
Without help, he said, “Business will lose its shine forever.”
