The Gem & Jewellery Export Promotion Council (GJEPC) has taken note of the United States' transition from the temporary Section 122 balance-of-payments surcharge to the new Section 301 tariff regime, effective from 24 July 2026, under which the additional tariff on Indian gem and jewellery exports remains unchanged at 10%.

The new tariff framework follows the conclusion of investigations by the Office of the United States Trade Representative (USTR) into the implementation and enforcement of prohibitions on imports produced with forced labour across 60 economies.

While the continuation of the 10% tariff presents ongoing challenges for Indian exporters, India has secured placement in the lower 10% tariff band after adopting a prohibition on forced labour imports. This provides Indian exporters with a 2.5 percentage-point tariff advantage over several competing manufacturing and trading hubs, including China, Hong Kong, Thailand, Türkiye, the UAE, Israel and Vietnam, all of which are now subject to a 12.5% additional tariff.

Shri Kirit Bhansali, Chairman, GJEPC, said, "At the outset, we categorically reject any implication that India’s gem and jewellery sector is linked to forced labour. Repeated studies have been commissioned that demonstrates 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.

“So imposing of 10% U.S. tariff under the new Section 301 regime, which is not at all justified, remains a challenge for India's gem and jewellery exports, particularly as key competing trading centres in diamond continue to enjoy duty-free access for natural diamonds. While India's placement in the lower tariff band offers some relative competitiveness in terms of jewellery, bridging the remaining tariff gap through an early India–U.S. Bilateral Trade Agreement and securing tariff relief for natural diamonds and coloured gemstones as provided to countries like EU, Malaysia remain our key priorities."

Key Advantages for India

India has been placed in the 10% tariff band, compared with the 12.5% tariff imposed on competing manufacturing and trading hubs such as China, Hong Kong, Thailand, Türkiye, the UAE, Israel and Vietnam.

This provides Indian exporters with a 2.5 percentage-point competitive tariff advantage over these countries in the U.S. market.

Key Challenges for the Industry

European Union (Belgium), a global diamond trading hub, continues to enjoy a 0% additional tariff on natural diamonds, while comparable Indian-origin diamonds attract a 10% duty, creating a significant competitive gap for Indian exporters.

Jewellery exports will continue to attract the existing U.S. MFN duty of 5.5%–6%, along with the additional 10% Section 301 tariff, taking the effective import duty to approximately 15.5%–16%.

Lab-grown diamonds and synthetic stones also remain subject to the 10% additional tariff.

Several major diamond-producing countries, including Botswana, Namibia, the Democratic Republic of the Congo, Zimbabwe, Sierra Leone, Liberia, Ghana, Tanzania and Mauritius, remain outside the scope of the current Section 301 action. However, rough diamonds substantially transformed in India are treated as Indian-origin products and therefore attract the 10% Section 301 tariff upon export to the U.S.

GJEPC's Way Forward

GJEPC has reiterated that natural diamonds and coloured gemstones are critical raw materials for the jewellery manufacturing industry and should be considered for exemption from the additional tariff under Annex III.

The Council is actively engaging with the Government of India to pursue an early India–U.S. Bilateral Trade Agreement (BTA) to bridge the tariff gap and enhance the competitiveness of India's gem and jewellery exports in the U.S. market.

Courtesy: AOJ DESK NEWS