Newer markets and economic growth to counter tariffs

India's gem and jewellery market is forecast for strong growth, with projections showing value-based consumption of gold jewellery up by a significant 12-14% in fiscal year 2026. Key drivers include rising disposable incomes, a growing organized retail sector, increased penetration of lab-grown diamonds (LGDs), and cultural factors like weddings. Challenges include volatile gold prices and higher financing costs, but the overall outlook remains bullish, with strategic expansions into Tier 2 and 3 cities.

Kirit Bhansali, Chairman, GJEPC: "India’s 7.8% GDP growth in the first quarter of FY 2026, despite global headwinds like the recent US tariff, reflects the resilience of our economy. Rising domestic demand for gems and jewellery is creating a strong cushion. This demand will help to ward off some impact out of the 50% import tariff on diamonds that has been put up by the USA.

India has now emerged as one of the leading jewellery consuming markets globally, with diamond jewellery alone accounting for USD 8.5 billion — nearly 10% of world demand. With rising incomes, a young aspirational population, and growing investor confidence, we believe India’s share of global diamond consumption will rise significantly, from the current 10% to as much as 30% in the coming years.

This growth story reinforces India’s position not only as the world’s diamond manufacturing hub but also as one of the most promising consumer markets, offering immense opportunities for global trade and long-term investment."

Furthermore, it is anticipated that by 2025, 90% of the sales in the Jewelry market will be attributed to Non-Luxury.

Lab-grown diamonds (LGDs) have emerged as a key growth driver within the sector. The Indian LGD market is projected to reach $1.2 billion by 2033, growing at a CAGR of nearly 15%. Exports of LGDs have grown eightfold since FY21, and India now contributes around 15% of global LGD production, the report states.

India's jewelry market is experiencing a surge in demand for traditional gold and gemstone designs, reflecting the country's rich cultural heritage.

The imposition of a 50% US tariff on Indian gems and jewellery is forecast to significantly harm India's export growth, potentially leading to a sharp decline in exports to the U.S., job losses, and a struggle for survival for the industry. To mitigate this impact, the Indian government and industry are exploring strategies like finding new export markets, providing financial support to businesses, and reforms for Special Economic Zones (SEZs) to help the industry survive the storm and prevent a permanent loss of global competitiveness.

The Indian government and the Gem & Jewellery Export Promotion Council (GJEPC) are focused on tapping new global markets to offset the loss of the U.S. market.

In the long term, we foresee a reshaping global supply chains. In short run, we anticipate challenges in sustaining India’s current export volume of USD 10 billion to the US market.

Additionally, GJEPC is actively engaging with stakeholders to address these risks and advocate for balanced solutions that ensure continued access to the U.S. market.

Competitors in Turkey, Vietnam, and Thailand, facing far lighter tariffs, are already making calls to our buyers. Once those relationships shift, history tells us they’re hard to reclaim. The risk isn’t simply a bad season—it’s a hollowing out of India’s midstream strength, a slow drain of skills and capital to friendlier shores.

The sparkle that India has built over generations is too valuable to lose to a tariff war we didn’t start.