US tariff shock: Gujarat’s diamond hubs suffer as export orders dry; 1 lakh jobs gone

Nearly 100,000 diamond cutting and polishing workers in Gujarat’s Saurashtra region have lost their jobs since the United States imposed a 10% baseline tariff in April, according to Gujarat’s Diamond Workers Union. According to ET, the union’s vice-president, Bhavesh Tank, said that the pace of layoffs accelerated over the past 10 days, when the tariff was first raised to 25% and then doubled to 50%.Most of the job losses have been in small units in Bhavnagar, Amreli and Junagadh, which typically take up job work from larger companies for cutting and polishing rough diamonds. Many export orders from US buyers have been either delayed or cancelled.“The units spread over Saurashtra, Junagadh, Bhavnagar and Amreli employ 300,000–400,000 people. Business was deteriorating in these places as US and China offtake of diamonds was slow. But the biggest blow came from the US tariff announced in April, which created an uncertainty in the diamond trade. Since then, cutting and polishing work has dried up and workers were shown the door,” Tank said. He added that affected workers earn around Rs 15,000– Rs 20,000 a month.While large companies have stayed silent on the scale of layoffs for fear of backlash, industry members say some displaced workers are finding employment in the lab-grown diamond (LGD) sector. However, concerns remain that if LGDs are also hit by the 50% tariff, the employment impact could be severe. “The US is the major market for LGDs,” warned Jayantibhai Savalia, chairman (Gujarat region) of the Gem & Jewellery Export Promotion Council (GJEPC), as quoted by ET.Dinesh Lakhani, group director of Rs 17,000-crore Kiran Gems, one of India’s leading diamond exporters, said that in the short term, higher tariffs could mean reduced production, temporary layoffs or shorter shifts. “If order volumes decline significantly, we may be forced to cut jobs to manage costs,” he said.India is the world’s largest exporter of diamonds, supplying to major markets including the US and China, and cutting and polishing around nine out of every ten diamonds globally. In FY25, India exported gems and jewellery worth $10 billion to the US, led by cut and polished diamonds and diamond jewellery.Industry representatives have urged the government to speed up bilateral trade agreement talks with Washington to address the tariff gap, and have also sought higher export incentives, interest subsidies and quicker goods and services tax refunds.Arvind Gupta, MD at Gallant Jewellery, whose exports to the US account for over a quarter of its sales, said the sharp price increase due to the tariffs will “significantly affect trade volumes, compress margins, and potentially displace thousands of jobs.”For now, the brunt of the layoffs is being felt in smaller towns rather than in Surat, the diamond hub employing over 800,000 people. Vijay Kumar Mangukiya, MD at Surat-based Dhani Jewels, said, “US buyers are talking to us. They are thinking whether to take the diamonds from India and manufacture the jewellery in Vietnam and Thailand, as the US tariff is less in these countries. If nothing can be worked out, only then will the units be forced to take some drastic steps.”