Will Trump India prices make the largest supplier of World Cup diamonds close? | Company and economy

For Kalpesh Patel, Diwali, the Festival of Enlightenment celebrated through India, could well mark the lights for its eight -year -old cutting and polishing unit.

The 35 -year -old man employs around forty workers who transform the rough diamonds into perfectly polite jewels for exports to the small factory of Surat, a city located in the state of western Gujarat.

His business has survived several slowdowns in recent years. But the mammoth of the United States President Donald Trump 50% prices On imports from India could be the last nail in the coffin of its unit, part of a natural industry already in difficulty, he said.

“We still have a few orders for Diwali and will try to complete them,” he told Al Jazeera.

Diwali, undoubtedly the biggest India festival, scheduled for the end of October this year, generally sees the interior sales of most goods. “But we may have to close the business even before the festival, because exporters could cancel orders due to high prices in the United States,” said Pateh.

“It is becoming more and more difficult to pay wages and maintain other expenses with orders.”

It is one of the 20,000 small and medium traders of Surat, known as “Diamond City of India”, which reduce together and polish 14 natural diamonds out of 15 products worldwide.

The United States is its largest export market. According to the GEM and Jewelry Export Promotion Council (GJEPC), the India Apex organization for industry, the country has exported cut and polished jewels worth $ 4.8 billion in the United States during the year 2024-25, which ended in March. This represents more than a third of total exports of cut diamonds and polite in India, at $ 13.2 billion over the same period.

Dimpal Shah, a diamond exporter based in Kolkata, told Al Jazeera that orders had already started to be canceled. “In the United States, buyers refuse to unload the products shipped, citing high prices. It is the worst phase of my career two decades in diamonds. ”

The United States imposes the penalty

A reciprocal rate of 25% on all Indian goods, which Trump announced on April 2, entered into force on August 7, after talks between the two countries has not given a trade agreement by then. Negotiations continue.

Meanwhile, on August 6, Trump announced an additional 25%rate, bringing the total rate rate to 50%. He described the additional rate which would come into force compared to August 27 as a penalty for the continuous purchase of Russian oil in India, while the American president tries to push Moscow to accept a cease-fire in Ukraine.

For the Gems industry, which was already facing a preexisting rate of 2.1%, the effective price is now 52.1%.

Ajay Srivastava, founder of Global Research Trade Initiative (GTRI), a commercial research group, described the additional hike of the Trump government as an act of “hypocrisy”Citing how the United States itself continues to trade with Russia and how China – the largest oil buyer in Russia – does not face any similar penalty.

“Trump is targeting India by frustration because it refused to follow the American line on the Russian-Ukraine conflict, and for its refusal to open its agricultural and dairy sector,” he added, referring to commercial discussions and larger differences on American demands for better access to the critical Indian economy sectors.

However, whatever the reasons for Trump’s prices, they are already injuring a diamond industry that bleeds several strokes.

The diamond sector has seriously struck

More than 2 million people are used in polishing and diamond -cutting units in the cities of Surat, Ahmedabad and Rajkot in Gujarat – and many have already undergone salary reductions in recent years, first due to the cocovid -19 pandemic, then large -scale invasion by Ukraine Russia.

“The pandemic has led to an economic slowdown affecting international markets in Hong Kong and China,” Rassera Ramesh Zilriya, president of Gujarat’s Diamond Workers Union told Al Jazeera. “The Western ban on Imports of raw diamonds from Russia Due to the Russian-Ukraine war and the G7 ban on Russia also affected our business, “he added.

Russia has always been a major source of raw diamonds.

Zilriya said 80 diamond workers have died by suicide over the past two years due to this economic crisis.

“The situation on the international market has led workers to be reduced by approximately 15,000 to 17,000 rupees ($ 194) per month, which made the survival difficult to increase inflation,” he said.

Once Trump prices have completely triggered, Zilriya fears that up to 200,000 people in Gujarat will lose their livelihoods.

Already, more than 120,000 former workers in the diamond sector have requested benefits. An allowance of 13,500 rupees ($ 154) per child, to support their families, was promised in May by the government of the State to those who have lost jobs due to the tumult of the sector in recent years.

But the prices, the pandemic and the war are not alone in blaming for the crisis: Laboratory cultivated diamonds Also eat slowly on the market for their natural counterparts.

“Unlike natural diamonds (diamonds), diamonds cultivated in the laboratory are not extracted but made in specialized laboratories and at the price of only 10% of the most natural. It is difficult even for a seasoned jeweler to identify the natural and laboratory with a naked eye.

Decline of exports

During the year 2024-25, India imported raw diamonds worth $ 10.8 billion, marking a drop of 24.27% compared to the $ 14 billion imported in 2023-24, in accordance with GJEPC statistics.

Exports of reduced and polished natural diamonds also had a drop of 16.75%, exports increased to $ 13.2 billion in 2024-25 compared to $ 16 billion the previous year.

“This decision (prices) would have large -scale repercussions on the Indian economy that could disrupt critical supply chains, block exports and threaten thousands of livelihoods. We hope to obtain a favorable reduction in prices; if not, it would be difficult to survive,” said Kirit Bhansali, the president of the GJEPC.

The prices could also harm American jewelers, warned Rajesh Rokde, president of the All India Gems and Jewelry Domestic Council (GJC), a National Federation of Trade for Industry.

“The United States has around 70,000 jewelers that would also face a crisis if jewelry is getting expensive,” added Rokde.

A domestic solution?

Merchants say that the need for the time is to increase the domestic demand for diamonds and diversify for new markets.

A stronger internal market “would contribute not only to the local economy, but would also create jobs for several thousand people,” said Radha Krishna Agrawal, director of Narayan Das Saraf Jewelers in the city of Varanasi, in the northern Uttar Pradesh.

The prices, he said, could prove a “disguised blessing” if they end up reducing the dependence of the India industry “on other countries”.

Bhansali said the national precious and jewelry market increased and had to reach $ 130 billion over the next two years, compared to $ 85 billion at the moment. The industry is also looking for new markets, including Latin America and the Middle East.

Gold already offers an example of a solid domestic market, amortizing the impact of tubes on exports, said Amit Korat, president of the Surat Jewellery Manufacturers Association.

But for the moment, the diamond sector in India does not have such a shield. He must be saved, urgently, said Patel, the owner of the Surat company at the dawn of the closure of his polishing and cutting unit.

Without help, he said, “the company will lose its shine forever”.