India turns to Gulf jewellery market to offset US tariffs

Vijay Valecha, August 6, 2025, The National

The Gulf is gaining traction as an alternative manufacturing and export hub for Indian jewellery, driven by rising American tariffs, experts say.

US President Donald Trump signed an executive order on Wednesday imposing an additional 25 per cent tariff on India over what the US says are the country's continued purchases of Russian oil.

The order doubles the tariff rate Mr Trump will charge on Indian imports to 50 per cent, among the steepest charges on US trading partners. The latest tariff is due to take effect in three weeks, according to the executive order.

On Tuesday, India's biggest jeweller and watchmaker, Titan, said it was exploring the Gulf region “as a manufacturing base to export to the US”.

Now it's looking to Gulf countries, including the UAE, which faces a lower 10 per cent tariff under Mr Trump’s baseline rate.

Titan, which is part of the Tata Group conglomerate that pulled in revenue of $165 billion in 2023-2024, announced plans to buy a 67 per cent stake in Dubai-based luxury retailer Damas.

This is part of a greater trend of global companies seeking new ways to avoid trade barriers, as the US levies tariffs on international trade partners.

US market gap

India’s $32 billion gem and jewellery industry is poised to “bear the brunt” of Mr Trump’s 25 per cent tariffs on Indian goods, which will take effect from August 7, according to Vijay Valecha, chief investment officer at Dubai-based Century Financial.

Last year, the US imported approximately $10 billion worth of jewellery from India, accounting for 35 per cent of India’s gem and jewellery exports in 2024.

The Indian jewellery industry employs nearly 5 million people and is responsible for almost 7 per cent of its gross domestic product, making it a key focus area for the government in terms of export promotion.

As a result, India is seeking alternative markets for its gems and jewellery, with the Gulf being the top contender, given its lower trade barriers, cultural affinity, geographical proximity, and free trade agreements with India, Mr Valecha explains.

“US tariffs on Indian jewellery have surged [up to 25 per cent to 27 per cent] as of August 2025, sharply eroding India’s competitiveness in its single-largest export market. As a response, Indian exporters and the Gems & Jewellery Export Promotion Council [GJEPC] have been actively exploring alternative markets, especially in the Gulf, but also in Latin America and Southeast Asia,” says Nicolas Michelon, managing partner of Alagan Partners, a Dubai corporate geopolitics consultancy.

“Under the India-UAE Comprehensive Economic Partnership Agreement, jewellery exports have seen a 60 per cent growth in gold jewellery and 17 per cent in diamond jewellery over the past three years, making the UAE a top destination and a gateway for India’s exports into the wider Gulf region.”

The Indian gems and jewellery sector is the country’s third-largest export to the US, after engineering and electronic goods.

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 $13 billion in the year to March, according to the GJEPC.

However, the government-backed agency said in a report last year that there are emerging opportunities in the Middle East, with exports of Indian studded gold jewellery to Saudi Arabia rising annually by 26.05 per cent and those to Kuwait jumping by 87.99 per cent in the second quarter of 2024.

“This move mirrors a strategic logic of retail expansion and tariff arbitrage: using the Gulf as both a destination and manufacturing pivot to offset US trade barriers.”

Echoing the same thoughts, Mr Valecha says Indian jewellers are strategically targeting the acquisition of Middle Eastern retail chains to enhance their access to Gulf markets.

“This is the second time Titan has attempted to secure a deal with Damas, and the previous attempt fizzled out due to disagreements over valuation. The potential deal is estimated to be valued at approximately 45 billion Indian rupees, equivalent to around $518 million,” he estimates.

Source:

The National