The diamond industry in Surat was struggling even before Donald Trump’s trade war deepened its woes. Kalpesh Mangukiya, the owner of Kushal Gems, said that they were forced to lay off a quarter of staff as the revenue more than halved due in part to western sanctions on Russian diamonds. Ebbing demand from the US and China, the world’s biggest diamond markets, amid competition from cheaper lab-grown gems has been a further complication.
Now Trump’s 10 per cent tariff on imports, and the potential for an additional levy on India, which processes 90 per cent of the world’s diamonds, threaten greater turmoil - unless a deal can be struck between New Delhi and Washington. “The tariffs will affect us and demand will come down,” Mangukiya said. The gloomy outlook reflects the deep crisis in India’s vast diamond processing industry - one of India's top export sectors.
Exports of cut and polished diamonds, which account for almost half of India’s gem and jewellery shipments, have fallen 17 per cent on an annual basis to just over $13bn in the year to March, according to Gems and Jewellery Export Promotion Council. Diamond traders have warned that the global $82bn industry has come to a halt due to Trump’s policies, with shipments through the gem-trading centre of Antwerp down to about one-seventh of usual levels.
The tariffs from the US, destination for about a third of Indian processed diamonds, are “one more blow to the sector”, said Ujjwal Patel, associate director at Indian ratings and analytics group CareEdge.
While the precise impact of tariffs on the industry was “not clear”, the uncertainty had been sufficient to paralyse the Indian trade, he added. An estimated 50,000 artisans have lost their jobs in the past 12 months and more than 60 have died by suicide as many struggled with mounting debts.
India’s diamond industry hopes that PM Narendra Modi can cut a trade deal with Trump due to his good relations with the US President. Many in India’s diamond industry now realise the risks of being dependent on the US. They are now looking to open up business in other markets, including Europe, the Middle East and within India itself.
