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India’s gem, jewellery, and apparel exporters are bracing for a sharp downturn following the United States’ decision to impose a 25% tariff and secondary sanctions on Indian exports starting August 1. Industry leaders are calling the move a major blow to one of India’s most valuable export sectors and a potential drag on the country's overall economic growth.
The U.S., India’s largest export destination for gems and jewellery, accounts for over $10 billion—or nearly 30%—of the sector’s global trade. With the new tariff regime poised to take effect, stakeholders warn of rising costs, disrupted supply chains, and serious risks to employment across the sector.
Kirit Bhansali, Chairman of the Gem & Jewellery Export Promotion Council (GJEPC), said the impact could be devastating.
“If implemented, this move could have far-reaching repercussions across India’s economy, disrupting critical supply chains, stalling exports, and threatening thousands of livelihoods,” Bhansali said.
“A blanket tariff of this magnitude will inflate costs, delay shipments, distort pricing, and place immense pressure on every part of the value chain — from small karigars (artisans) to large manufacturers,” he added, urging both governments to resume dialogue to protect decades of bilateral trade cooperation.
The apparel industry, another major contributor to India’s export economy, is also expected to feel the heat. Rahul Mehta, Chief Mentor of the Clothing Manufacturers Association of India (CMAI), said the tariffs could make Indian apparel 7–10% more expensive than global competitors—particularly concerning at a time when margins are already tight.
“This will certainly hurt our exports to the U.S.,” Mehta said. “But given the history of tariff reversals in other countries, I’m holding off panic for now.”
He added that India’s recent Free Trade Agreement (FTA) with the U.K. and progress on a deal with the European Union could help mitigate the setback. “It’s a tough time, but not beyond our ability to face,” he noted.
The tariff announcement also has macroeconomic implications. Aditi Nayar, Chief Economist at ICRA, said the tariffs would act as a headwind to India’s GDP growth.
“When the U.S. had initially imposed tariffs, we had revised our FY26 GDP growth projection to 6.2%, factoring in weak export growth and delayed private investment,” Nayar said. “The newly proposed tariffs and penalties are more severe than expected and could further dampen growth. The extent of the downside will depend on how widespread the penalties turn out to be.”
As the deadline looms, industry leaders are urging the Indian and U.S. governments to return to the negotiating table to prevent long-term damage to trade relations and employment.
