For Jewelry Manufacturers, Higher Tariffs Create Long-Term Worries

Mumbai—For Indian manufacturers engaged in the export of jewelry set with diamonds, colored gemstones or lab-grown diamonds, the months of August to November have traditionally been the peak season.

That’s when their factories in SEEPZ SEZ, Mumbai—the epicenter of the jewelry export industry—went into overdrive, working almost around the clock to deliver on the steady flow of orders from U.S. retailers before and during the holiday season.

The hectic pace often continued almost until year end.

It’s a pattern that has remained unchanged for years, until now.

At present, the scenario within the special economic zone is far from buoyant. Since the last week of August, manufacturing activity has slumped as orders have reduced to a trickle.

It’s a worrying time for most large companies.

A Key Supplier to U.S. Retailers
SEEPZ SEZ is a modern jewelry manufacturing complex with few parallels.

It is synonymous with exports of jewelry set with diamonds, colored gemstones, or lab-grown diamonds (known as studded jewelry) from India and has a huge concentration of nearly 200 units in a relatively small area.

Together, they employ about 50,000 workers and over 80 percent of the production is shipped to the United States.

The U.S. government’s unexpected imposition of a 50 percent tariff on all goods imported from India has created an obstacle that a number of these companies are finding difficult to surmount.

Gems and Jewellery Export Promotion Council (GJEPC) Chairman Kirit Bhansali said, “The entire industry may come to a standstill, placing immense pressure on every part of the value chain, from small to large manufacturers.”

Industry observers emphasize that even the 25 percent tariff rate that was in effect from Aug. 7 to Aug. 26 had posed a serious challenge, as it was higher than the tariffs on goods from competing manufacturing hubs such as Turkey (15 percent), Thailand (19 percent), and Vietnam (20 percent).   

Now, the 50 percent rate, which went into effect Aug. 27, has raised the bar, turning it into a basic question of survival.

“The further hike has made Indian manufactured jewelry relatively less competitive in the U.S. market, an imbalance that, if unaddressed, could erode India’s long-standing position as a key supplier,” Bhansali said. 

Tariff Hikes Take a Toll
Figures released by GJEPC indicate that exports of studded jewelry from India to the U.S. have fallen by nearly 18 percent during the first five months of the Indian financial year, which runs from April 1 to March 31.

Studded jewelry exports dipped to $868.9 million between April-August 2025, compared with $1.06 billion in the same period a year earlier.

The drop in U.S. figures stands in stark contrast to total exports of studded jewelry worldwide from India. In the same period, worldwide exports increased, although only about 5 percent.

The month of July was an exception to the trend.

Overall, India’s studded jewelry exports across the world shot up by 17 percent that month, GJEPC figures show.

Manufacturers sought to finish most existing orders from the U.S. before Aug. 7, the day tariffs rose from 10 percent—the baseline figure imposed when President Donald Trump “paused” his reciprocal tariffs in April—to 25 percent.

To an extent, this “early shipment” model that many large U.S. retailers also implemented provided a temporary solution to what are longer-term troubles.

Unsustainable Levels
Colin Shah of Kama Jewelry, a leading jewelry exporter, said already a number of export orders from long-standing clients have been placed under review as both partners assess the situation.

“Margins are already thin, and it is not possible for anyone to absorb such a sudden major escalation in landed costs,” he said.

The industry is trying to grapple with the situation so they don’t lose clients with whom ties have they’ve developed relationships over many long the years.

Nilesh Kothari of Jewelex, another leading exporter of studded jewelry, also believes there are many challenges in the current scenario.

“The steep 50 percent rate is going to hit the industry badly,” he said.

When tariffs were at 10 percent, most partnerships endured. He said that to maintain continuity in the supply chain, mutual arrangements were worked out.

“It varied from cases where the manufacturer absorbed the extra amount entirely, to many others where different methods of sharing the burden were mutually agreed upon,” he explained.

After the 25 tariff came into effect, both retailers and manufacturers were forced to look for alternative options.

“At 50 percent levels, the urgency of figuring out the way forward has increased tremendously,” Kothari said.

Challenging Future
As they look to the future and express the hope that a larger trade agreement between India and the U.S. will remove the huge tariff barrier, most leading jewelry manufacturers also admit they can’t remain in wait-and-watch mode much longer. 

They agree that contingency plans were drawn up, keeping the year end as the horizon. Right now, it is not possible to plan too far ahead, most assert. 

Situations are fluid and decisions are being taken depending on specific orders and requirements as they come in, a process that usually continues until year end. 

A few companies have tried to explore options that can be stop-gap measures to keep the business afloat. 

Steps such as doing partial manufacturing, where only part of the process is done in India and some orders are executed through partner units or tie-ups with manufacturers located in other geographies, are being considered. 

The consensus, however, is that while these workarounds may help maintain relationships for now, the serious impact they have on turnover and margins rules them out as the basis for any longer-term plans. 

Another hope expressed by many is that the Indian government will announce a relief package to support export sectors affected by the tariffs. 

GJEPC’s Bhansali outlined some of the proposals that would help tide over jewelry manufacturers during this tough patch. 

These include interest subvention on export credit, both pre- and post-shipment; steps to expedite strategic bilateral trade agreements with key markets such as China, Brazil, South Africa and the European Union based on secure, stable policy frameworks and long-term market access; and measures that will ease working capital pressures, as well as other fiscal remedies.

Exporters also hope the government will grant permission for them to take on reverse job work, and permit sale of a portion of their production to the domestic market without conditions. 

The latter, it is believed, will provide critical relief especially in the short run, as sales of diamond jewelry have been rising steadily in India for some time. The recent reduction in the country’s goods and services tax (GST) for many consumer goods is expected to further accelerate domestic demand.

Of course, everyone continues to hope that a comprehensive Indo-U.S. trade accord, which had appeared almost certain earlier this year, will be finalized soon.  

However, there is a strong consensus that the time is not too far away when companies may be forced to consider different steps, balancing between the need to maintain market share and calculating how to make this feasible under the current tariff structure.