The United States and India have agreed on a framework for an Interim Trade Agreement that will eliminate US import duties on Indian cut-and-polished natural diamonds and coloured gemstones once the deal is formally concluded. The arrangement, confirmed in a joint statement issued by both governments, also reduces the reciprocal tariff on Indian jewellery exports to 18%, while lab-grown diamonds remain subject to tariffs.
According to the joint statement, and subject to the successful conclusion of the interim agreement, the US “will remove the reciprocal tariff on a wide range of goods identified…including generic pharmaceuticals, gems and diamonds, and aircraft parts”.
The zero-duty provisions apply to goods listed in Annex III of the relevant Executive Order and include cut but unset natural diamonds and coloured gemstones. Laboratory-grown diamonds are not included.
Timeline and Current Tariff Position
The framework has been announced, but the zero-duty measures will only take effect after the interim agreement is signed. India’s minister of commerce and industry, Piyush Goyal, has indicated that the signing should happen “sometime in March. We’ll have to match calendars and schedules.”
Until then, current tariff levels remain in place.
As of early February, US import duties on Indian goods are:
- Finished jewellery: 31%, comprising the 25% reciprocal tariff and the 6% Most Favoured Nation duty
- Cut and polished natural diamonds: 25%
- Lab-grown diamonds: 25%
Following the implementation of the interim agreement, tariffs are expected to change to:
- Finished jewellery: 24%, comprising an 18% reciprocal tariff and the 6% MFN duty
- Cut and polished natural diamonds: 0%
- Lab-grown diamonds: 18%, with no additional MFN duty
The Gem & Jewellery Export Promotion Council of India, GJEPC, stated: “If and when the benefits of Annex III are implemented, cut and polished diamonds are expected to become duty-free. However, lab-grown diamonds are not included in Annex III, so they would continue to be subject solely to the 18% reciprocal tariff.”
US-Origin Casting Exemption
GJEPC also confirmed that jewellery cast in the United States and exported to India for stone setting or finishing will continue to qualify as US-origin under the doctrine of substantial transformation. As a result, no reciprocal tariff will be applied on the Indian value addition when those goods are re-imported into the US.
Export Decline and Industry Response
Industry representatives have linked the agreement to a sharp decline in Indian exports to the US over the past year. According to GJEPC, India’s cut and polished diamond exports to the US fell from USD 3.64 billion in April–December 2024 to USD 1.45 billion in April–December 2025.
Kirit Bhansali, Chairman, GJEPC, said: “The Indian gem & jewellery industry is elated by the announcement of zero-duty access for diamonds and coloured gemstones to the US under the Interim Agreement framework — a decisive turning point that breathes new life into the sector.
“The diamond sector had taken a severe hit over the past year, with India’s cut and polished diamond exports to the US — our largest market — declining by over 60%, from USD 3.64 billion in April–December 2024 to USD 1.45 billion in April–December 2025, as tariffs eroded competitiveness.
“Under the announced framework, duties on jewellery have been reduced to 18%, which provides meaningful relief to exporters. We are confident that, upon conclusion of the Interim Agreement, diamonds and coloured gemstones will receive full zero-duty treatment as envisaged, restoring competitiveness in our most critical market.
“These efforts were actively taken up by the Government of India with the United States. We applaud and sincerely commend the Hon’ble Prime Minister, Shri Narendra Modi, US President Mr. Donald Trump & Hon’ble Commerce & Industries Minister Shri Piyush Goyal and the entire government machinery for the remarkable speed and efficiency in reaching this framework within days of the announcement of the deal, a testament to visionary leadership and an unwavering commitment to strengthening India-US trade ties.”
Ashish Borda, Convener – Promotion, Marketing & Business Development Sub-committee, GJEPC, commented: “The interim zero-duty announcement is a positive signal for the industry, with expectations of swift implementation that will lead to a strong rebound in exports.
“The earlier duty regime had been particularly challenging for SMEs, which lacked the ability to absorb steep costs. The move by the Trump administration comes as a timely confidence booster for the sector.”
Dinesh Lakhani, Group Director, Kiran Gems Pvt. Ltd., said: “The Interim Trade Agreement between India and the United States, leading to the removal of tariffs, is a timely and positive step for the Indian gems and jewellery industry. For a sector that thrives on trust, long-term relationships, and global collaboration, this development restores both competitiveness and confidence – especially in the natural diamond segment, where India plays an unmatched role in value addition and scale.
“The United States has always been one of the most important markets for Indian diamonds and jewellery. The earlier tariff challenges had disrupted demand, pricing structures, and supply chains, creating pressure across the ecosystem- from large manufacturers to small artisans. The tariff relief provides immediate breathing space, allowing Indian exporters to re-engage with US partners on more equitable terms and to temporarily regain momentum.
“For natural diamonds, this is particularly significant. India is not just a supplier; it is the global centre for precision cutting, ethical sourcing, and consistent supply. Lowering trade barriers reinforces India’s position as a trusted partner in the global diamond value chain and helps sustain millions of livelihoods linked to this industry.
“I would like to express my sincere gratitude to the Government of India for its proactive and pragmatic approach in trade negotiations. The ability to balance national interests with the realities of global trade reflects strong leadership and a deep understanding of export-driven industries. I also commend the Gem & Jewellery Export Promotion Council (GJEPC) for its persistent representation of industry concerns and constructive engagement with policymakers.
“Apart from the above-listed positive developments, we also need to realise that there are additional opportunities over and above the existing business in our gems & Jewellery manufacturing sector.
“The next frontier is strategic: India now hosts world-class management, design, analytics, and retail-operations talent, evidenced by global financial and modern retail firms running GCCs from India. With tariff rationalisation across developed markets (EU, UK, and the USA), the global premium and luxury retail industry can increasingly view India not just as a product supplier but as an end-to-end global hub—integrating manufacturing, design, brand management, and technology services.
“As we look ahead, I am optimistic that this progress will lead to a comprehensive agreement and many other positive outcomes that support sustainable growth, strengthen bilateral trade, and allow the Indian gems and jewellery industry – especially natural diamonds – to shine even brighter on the global stage.”
Shreyans Dholakia, Entrepreneur-Brand Custodian, Shree Ramkrishna Exports, said: “The India-US Interim Trade Agreement is an important step towards a stable, reciprocal, and future-oriented trade partnership. For the gems and jewellery sector, where the United States remains our largest export market, this agreement opens new avenues for trade, investment, and value creation.
“Such outcomes highlight the importance of sustained industry–government engagement, including the constructive role played by institutions such as GJEPC and FICCI in representing sectoral perspectives. This framework strengthens supply-chain resilience and a shared commitment to balanced, long-term economic cooperation.”
Adil Kotwal, President, SEEPZ Gems & Jewellery Manufacturers’ Association, said: “The agreement is very positive for the natural diamond trade. Bringing tariffs on loose natural diamonds down to 0% is a big relief, especially for larger stones like 1 or 2 carats, where an 18% duty would have made jewellery significantly more expensive. This should give a strong boost to manufacturers focused on bigger, high-value stones.
“Lab-grown diamonds, however, remain at 18% despite growing US consumer preference for LGDs.
“On jewellery, moving from the earlier 50% tariff to 18% at least creates a level playing field with competing Asian markets such as Vietnam, Hong Kong, China, and Bangkok.
“India also has an edge because we finance the business, often extending credit from 2-6 months, while many competitors operate on upfront payments. Combined with our design and manufacturing strength, we remain competitive and, in fact, better positioned under these conditions.”
Ajesh Mehta, Co-opted Member, Diamond Panel, GJEPC, said: “The India-US trade agreement is a major step forward, particularly with tariffs on natural diamonds reduced to 0%. The industry had been awaiting this for a long time. It creates clear gains for India’s diamond cutting & polishing sector and the US jewellery manufacturing trade.
“Given that the US is our largest market, the impact will be significant. However, the remaining jewellery tariffs at 18% are a concern, as setting small diamonds in the US may not be economically viable, though larger stones should remain unaffected.
“The exclusion of lab-grown diamonds appears protectionist. Since most LGDs are cut and polished in India, a 0% duty would have supported both industries.”
Colin Shah, MD, Kama Jewelry, said: “The announcement of zero tariff on gems & diamonds is a momentous one and well-received by the Indian gems & jewellery sector. India, a global hub for diamond processing, was severely affected by trade tariffs, with trade in cut and polished diamonds dropping by over 60%. The waiver of tariffs will help revive exports and reinstate the sparkle in business.
“We are thankful to the Indian Government and Ministry of Commerce for the negotiation, as this will not just give a fillip to the sector but also go a long way in adding substantial value to the goal of Aatmanirbhar Bharat.”
