Seated before a pile of rough diamonds laid out on a faded velvet tray, Kalpesh Mangukiya said his cutting and polishing business in the Indian city of Surat was struggling even before Donald Trump’s trade war deepened his woes.
The owner of Kushal Gems had already been forced to lay off a quarter of his staff as revenue more than halved due in part to western sanctions on Russian diamonds. Ebbing demand from the US and China, the world’s biggest diamond markets, amid competition from cheaper lab-grown gems has been a further complication.
Now Trump’s blanket 10 per cent tariff on imports, and a potential for an additional levy on India, which processes 90 per cent of the world’s diamonds, threaten greater turmoil — unless a deal can be struck between New Delhi and Washington.
“The tariffs will affect us . . . demand will come down,” Mangukiya said in his office, as TV monitors streamed footage from the cramped workshops next door, where about 100 employees hunched over abrasive polishing wheels in the sweltering pre-monsoon heat.
“I don’t think things will improve much in the coming months,” he added. “It’s not fun doing business.”
The gloomy outlook reflects the deep crisis in India’s vast diamond processing industry — one of the country’s top export sectors, along with electronics and pharmaceuticals — which employs more than 1mn people.
Much of it is based in Surat, a riverside city in Gujarat state that became a hub for the gem merchants who fled Burma — now Myanmar — after the Japanese invasion during the second world war.
Exports of cut and polished diamonds, which account for almost half of India’s gem and jewellery shipments, have fallen 17 per cent on an annual basis to just over $13bn in the year to March, according to the government-backed Gems and Jewellery Export Promotion Council (GJEPC).
More widely, diamond traders have warned that the global $82bn industry has ground to a halt due to Trump’s policies, with shipments through the gem-trading centre of Antwerp down to about one-seventh of usual levels.
The tariffs from the US, destination for about a third of Indian processed diamonds, are “one more blow to the sector”, said Ujjwal Patel, associate director at Indian ratings and analytics group CareEdge.
While the precise impact of tariffs on the industry was “not clear”, the uncertainty had been sufficient to paralyse the Indian trade, he added.
Processors and intermediaries in Surat are struggling to move through their large built-up inventories.
“There’s [been] no stability for the last year,” said diamond trader Nirav Davda, as his uncle next to him, who has been in the business for 40 years, examined a pile of glittering stones through a magnifying loupe. “We’re waiting and watching — we’re not taking any new orders.”
The downturn has had a deep social and economic impact on Surat, the second-biggest city in a western state that is the political stronghold of Prime Minister Narendra Modi.
An estimated 50,000 artisans have lost their jobs in the past 12 months and more than 60 have died by suicide as many struggled with mounting debts, according to the Diamond Worker Union Gujarat.
“Our industry is suffering,” said Bhavesh Tank, the union’s vice-president, who showed the Financial Times a photograph of a young family who had taken their own lives days earlier by jumping from a bridge. “There was already such a big problem when there was no tariff.”
India, the world’s most populous nation, is a largely domestically driven economy that is less export-dependent than many of its Asian peers. Yet Modi, who was among the first foreign leaders to visit the US president in Washington following his return to office, has acted with haste to placate the Trump administration.
On a visit to India last month, US vice-president JD Vance had warm words for Modi and the relations between the two countries, praising what he called “very good progress” on a potential trade deal, the first part of which they were looking to sign later this year.
“The next three to six months are, I think, important to see how the whole tariff situation evolves,” said Shaunak Parikh, GJEPC vice-chair. “Post that I believe we should get some stability,” he added.
India’s government had been “working very hard”, he continued. “We’re quite hopeful.”
On the floor of Kushal Gems’ sweaty workshop, many of the workers said they knew of colleagues who had lost their jobs.
But largely they kept their heads down, with few paying much attention to the global turmoil caused by Trump’s executive orders.
“We’re not aware of any tariff,” said 46-year-old Kazabhai Mana, who has been polishing stones since he was a teenager. “We just do our work, God will provide.”
Yet many in the upper echelons of India’s diamond industry have belatedly come to realise the risks of being dependent on the US, according to Amit Korat, vice-president of the Surat Jewellery Manufacturers’ Association.
Indian exporters were now looking to drum up business in other markets, including Europe, the Middle-East and within India itself, he said.
“Orders from the US are on hold,” Korat added, voicing deep concerns about the future for Surat and its workers. “This tariff is directly impacting their lives, they’re not privileged people.”
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