India's Cut and Polished Diamond Exports Fall 8.5% in FY2025-26 as US Market Contracts 45%

Executive Summary

India's diamond export sector completed its most challenging fiscal year in over a decade. GJEPC's full-year FY2025-26 data, released April 15, confirms a structural realignment: the United States—historically India's largest polished diamond destination—contracted by nearly half following the imposition of 50% import tariffs on Indian goods in August 2025. The industry is adapting, but market diversification has not yet compensated for US volume losses at scale. Cut and polished diamonds totaled $12.16 billion, down 8.52% year-on-year, representing 43.9% of India's total gem and jewellery export basket of $27.72 billion. The US market fell 44.92%, while UAE grew 10.52%, Hong Kong surged 30.99%, and Australia rose 38.33%. Lab-grown polished diamond exports fell 10.55% to $1.13 billion despite volume growth, indicating ongoing per-carat price compression. Overall industry exports reached $27.72 billion, down 3.32% year-on-year. The GJEPC describes the result as a structural reset toward broad-based growth, reducing dependence on any single market. However, the US accounts for approximately 30% of global polished diamond consumption and cannot realistically be replaced by UAE and Hong Kong at scale in the near term. The ongoing India-US trade negotiations—targeting a 0% tariff on natural diamonds—remain the most significant near-term variable for Indian midstream recovery.

Industry Impact

Indian midstream manufacturers and polished exporters face a structural shift in their customer base. The 45% decline in US exports is only partially offset by growth in UAE and Hong Kong. US retailers sourcing polished from India face reduced supply and higher effective costs. Until a trade deal eliminates current tariffs, US-bound shipments will remain suppressed, concentrating demand in alternative markets and creating pricing divergence between US and non-US polished benchmarks. Lab-grown price erosion compounds margin pressure for Indian cutters active in both natural and synthetic categories.

Next Steps

1. Map current client exposure to the US market and quantify the revenue gap—identify which alternative markets (UAE, Hong Kong, Australia) are absorbing displaced volume.
2. Engage GJEPC market diversification programs targeting Hong Kong and UAE buyers, both of which showed double-digit growth in FY26.
3. Model two scenarios for FY2026-27: one with a US-India trade deal (0% tariff), one without—revenue differences will be material for inventory and production planning.
4. Evaluate rough buying levels for the next quarter given reduced factory throughput; over-stocking carries significant working capital risk.
5. Track the India-US trade deal timeline: a confirmed deal would likely trigger a rapid US restocking cycle, creating near-term demand spikes.