The US reciprocal import duty is set to hit gem and jewellery exports which are already down 23 per cent this fiscal.
The US is one of India’s largest jewellery export markets, accounting for almost 30 per cent of the share. Indian jewellery exports to the US are over $11 billion per year.
Incidentally, India faces higher reciprocal tariffs compared to competitors such as Turkey and UAE at 10 per cent compared to 26 per cent levied on India.
With lower import duties, both countries will gain further market share from India in a highly commoditised and easily substitutable product space.
As the announced tariffs are retaliatory, they will be matched with the existing rates.
India currently imposes a 20 per cent import duty on gold, silver and platinum jewellery from the US.
Gold prices are inching towards the $3200 mark due to the strong tariffs announced and future uncertainties.
With exports already down, the tariff shock compounds existing weakness—making this one of India’s most exposed sectors under the new regime, said Prabhudas Lilladher Research
A further drop in exports could lead to more job losses in the highly labour-intensive sector, it said.
Colin Shah, MD, Kama Jewelry, said it is a big setback for India as the US has announced retaliatory tariffs.
The Gems and Jewelry sector will be the most affected as import tariffs may be up to 20 per cent from the current zero per cent on loose diamonds and 5.5-7 per cent on gold jewellery, he said.
The Indian government should work in this direction and look at lowering tariffs on US goods exported to India, he added.
Efforts should be made to rationalise import duty as well as balance trade with all major nations. Import duties help protect local industries, but the retaliatory tariffs will end up negating this step by most governments, said Shah.
“Broadly, we expect the uncertainties to continue in the short term till clarity emerges on the latest rounds of negotiations and new tariff rates on imports,” he added.
