Indian Gem and Jewellery Exporters Face New US Tariff Heat as Section 301 Rules Kick In

India’s prized gem and jewellery industry has found itself navigating fresh headwinds in its largest export destination, following the United States' transition to a new trade regime. As of 24 July 2026, Washington has officially moved from its temporary Section 122 balance-of-payments surcharge to the Section 301 tariff framework, keeping an additional 10% levy firmly attached to Indian gem and jewellery shipments.

The shift stems from investigations conducted by the Office of the United States Trade Representative (STR) across 60 economies regarding forced labour standards. While the 10% duty presents a tough hurdle for domestic players, India managed to secure a spot in the lower duty band after amending its Foreign Trade Policy to explicitly prohibit imports produced through forced labour.

That placement gives Indian exporters a 2.5 percentage-point edge over rival trading hubs—including China, Hong Kong, Thailand, Türkiye, the UAE, Israel, and Vietnam—which now face a steeper 12.5% duty.

Despite this relative relief, top industry bodies have voiced strong concerns, firmly pushing back against any trade measures that penalise Indian craft and manufacturing.

Industry Refutes Forced Labour Claims, Urges Washington for Parity

Addressing the development, Kirit Bhansali, Chairman of the Gem & Jewellery Export Promotion Council (GJEPC), vehemently rejected any underlying assumptions about labour practices within the domestic ecosystem.

"At the outset, we categorically reject any implication that India’s gem and jewellery sector is linked to forced labour," Bhansali stated. "Repeated studies have been commissioned that demonstrate the industry’s long-standing commitment to responsible sourcing, worker welfare, and ethical business practices. We also welcome the Government of India’s recent amendment to the Foreign Trade Policy that bars the import of goods produced, wholly or partly, with forced labour—an important step that reinforces India’s commitment to human rights and aligns our trade rules with internationally accepted labour standards."

Bhansali noted that while the 2.5 percentage-point advantage over regional competitors offers a cushion for finished jewellery, the persistent 10% tariff under Section 301 remains uncalled for and creates friction for exporters—especially when compared to major European trading centres.

Echoing similar concerns, Rajesh Rokde, Chairman of the All India Gem and Jewellery Domestic Council (GJC), warned of squeezed margins and potential growth hurdles.

"The U.S. government’s decision to impose a 10% tariff on imports from India under Section 301 will undoubtedly create challenges for our gem and jewellery exporters, making Indian products less price competitive in one of our largest markets," Rokde said. "While the rate is lower than that imposed on some other countries, this measure still places significant pressure on margins and could dent the growth trajectory of our industry. As Chairman of GJC, I urge the Government of India to engage with U.S. authorities at the earliest to resolve this issue and seek relief or exemptions. Protecting the competitiveness of Indian jewellery exports is vital to sustaining livelihoods and reinforcing India’s position as a trusted global leader in gems and jewellery."

The Fine Print: Duty Discrepancies and Processing Realities

The new framework introduces several structural pain points for Indian businesses:

• Disadvantage Against Belgium: The European Union (Belgium)—a dominant global diamond trading hub—continues to enjoy 0% additional duty on natural diamonds. Indian-origin natural diamonds, by contrast, carry the 10% tariff, placing local cutters and polishers at a severe disadvantage.
• Compounded Duties on Jewellery: Finished jewellery exports to the US now face an effective import duty of nearly 15.5% to 16%, combining the standard Most Favoured Nation (MFN) rate (5.5%–6%) with the 10% Section 301 tariff.
• Impact on Synthetics: Lab-grown diamonds and synthetic gemstones are not exempt and remain subject to the 10% additional levy.
• The Rules-of-Origin Catch: African diamond-producing nations such as Botswana, Namibia, Ghana, and Tanzania remain outside the scope of Section 301. However, because rough diamonds undergo substantial transformation when cut and polished in Surat and Mumbai, they are classified as Indian-origin products—triggering the 10% duty upon arrival in the US.

The Road Ahead: Fast-Tracking Trade Talks

To safeguard an industry that supports millions of skilled artisans across the country, the GJEPC is urging New Delhi to step in with targeted trade diplomacy.

The Council has formally requested that natural diamonds and coloured gemstones—treated as crucial raw materials for jewellery manufacturing—be granted an explicit exemption under Annex III of the U.S. tariff schedule.

More broadly, trade leaders are pushing the Ministry of Commerce and Industry to fast-track negotiations for an early India–U.S. Bilateral Trade Agreement (BTA). Securing level playing field provisions similar to those granted to the EU and Malaysia remains the ultimate priority for domestic exporters striving to maintain their footprint in the lucrative American market.