Friday, 07 Nov, 2025
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Exports took a heavy blow in September after a 50% US tariff kicked in, driving shipments of precious stones and gold jewellery down more than 70%, government data show
India’s glittering export story to the US has lost its shine. The gems and jewellery shipments—one of the biggest foreign-exchange earners—collapsed in September after Washington’s 50 per cent tariff took full effect. The numbers tell a bruising story of how swiftly trade measures can sting: exports of pearls, precious, and semi-precious stones plunged 76.7 per cent, while shipments of gold and other precious metal jewellery tumbled 71.1 per cent, according to commerce department data.
The shock has rippled across India’s broader export basket. Cotton fabrics and made-ups were down 36.2 per cent, marine products by 26.9 per cent, industrial machinery for dairy by 28.1 per cent, readymade garments by 25 per cent, drug formulations by 16.4 per cent, and auto components by 12 per cent—all registering double-digit declines during the month.
The impact was immediate and widespread. India’s overall exports to America fell 11.9 per cent in September to $5.5 billion, marking the fourth straight month of contraction. Just a few months earlier, in May, those shipments had peaked at $8.8 billion before starting their downward slide.
How the tariffs hit
The trouble began in August when Washington imposed a 25 per cent “reciprocal” tariff on Indian goods, citing trade imbalances. Then came a second blow—another 25 per cent levy, announced in retaliation for India’s continued purchase of discounted Russian oil. The two duties combined pushed the effective tariff on exports to 50 per cent by late August, with September being the first full month of impact.
Few sectors have been hit as hard as gems and jewellery. The US. is India’s largest market for these exports, accounting for 37 per cent of all shipments of precious stones and 28 per cent of gold jewellery exports. The double tariff effectively priced Indian products out of the American market, forcing buyers to look to alternative suppliers like Thailand and Vietnam.
The losses in jewellery mirror broader vulnerabilities in India’s export structure. The US remains India’s largest export destination, contributing roughly one-fifth of total shipments, and its dominance has only deepened over the past decade despite New Delhi’s push to diversify.
Pockets of resilience
The picture wasn’t entirely bleak. Even as traditional export sectors stumbled, others held up strongly. Shipments of telecom instruments, including iPhones assembled in India, surged 218.9 per cent in September. Exports of electronic components jumped 38.2 per cent, while petroleum products rose 26.5 per cent. These gains point to a structural shift in India’s export mix—toward high-value electronics manufacturing and energy products under the “Make in India” and Production-Linked Incentive (PLI) schemes.
Still, those gains weren’t enough to offset the drag from jewellery, textiles, and pharmaceuticals, which together form the backbone of India’s export earnings. The fall in labour-intensive sectors such as garments and gems is particularly concerning, given their role in employment and small-business livelihoods.
Trade talks in focus
For now, New Delhi is counting on diplomacy to arrest the slide. Commerce and Industry Minister Piyush Goyal said on November 1 that trade talks with Washington are in “an advanced stage,” with both sides aiming to finalise a bilateral trade deal by the end of the month.
“The important thing is not the amount of tariff,” Goyal said. “The key is what comparative advantage India can gain over competitors. Tariffs are not paid by Indians—they are paid by Americans. The negotiation is always to find that competitive edge, which helps us grow business.”
India has set an ambitious goal: doubling bilateral trade in goods and services with the US to $500 billion by 2030. That optimism, however, will depend on how quickly both countries can resolve tariff frictions without undermining the flow of labour-intensive goods.
Balancing act ahead
The September data underline the fragility of India’s export momentum. While global demand remains patchy, the US tariffs have turned a slowdown into a shock. Economists warn that a prolonged decline in gems, jewellery, and textiles could drag down India’s overall export growth for the fiscal year.
Yet the resilience of electronics and petroleum exports suggests that India’s diversification efforts are starting to bear fruit. The near-term pain may be sharp, but the long-term shift—from hand-crafted gold to high-tech goods—could ultimately reshape the country’s trade profile.
For now, the world’s biggest democracy finds itself caught between two imperatives: cushioning traditional sectors that employ millions, and scaling up new-age manufacturing to withstand future shocks. Whether New Delhi can strike that balance will determine if the sparkle returns to India’s export story.
