US President Donald Trump imposed additional 25% tariffs on India, which came into effect on August 27, taking the total to 50% tariffs. The impact of these tariffs has been discussed in media for months. The additional tariffs were levied on India citing purchase of oil from Russia. There is a section in India that is constantly working hard to bolster the narrative of Trump and America in an attempt to pressurise Indian government even though it is hurting Indian interests.
As part of the same campaign, it is now being claimed that this tariff decision by Trump has had the biggest impact on India’s diamond industry and there is a possibility of a terrible recession, due to which thousands of jobs will also be at risk.
Surat is the center of India’s diamond industry. Diamonds are exported from here to the world including America and a business worth thousands of crores is done every year. It is not new knowledge that there is a huge recession in this industry in Surat.
Leading the charge of crediting Trump tariffs for this slowdown are media outlets like Reuters and BBC. Notably, their reporting is always suspect, especially on geopolitical issues affecting India. Later, Gujarati-Hindi media also picked up the issue and said Trump’s tariffs are creating this slowdown.
The BBC has published a report on the local industry in Surat. It shows the condition of diamond factories and says that many places used to employ a large number of people, but now the number has been reduced and employees have been laid off. The reason is that orders are not being received and due to this, the employees are not being paid. In addition, many jewelers are complaining that their salaries have been reduced, or they are being removed from work, the report adds.
The BBC report further states, “The direct impact of the tariff-induced recession has already started to hit workers.” Quoting some individuals, it said that the jobs of more than one lakh jewelers are at risk and their future is bleak.
Reuters, in its report, has focused on the diamond bourse in Surat, which is always a target of the media. Even though Prime Minister Modi inaugurated it some time ago, it has not yet fully started. Reuters has linked this to the tariffs and claimed that most of the offices are empty. The report claimed that orders have now decreased due to the increase in tariffs. In addition, it has also been said, quoting some individuals, that many industrialists are no longer willing to move their business to the diamond bourse.
Apart from that, the report has talked about the recession by quoting many small diamond businessmen. Apart from that, several other unnamed individuals have repeated the claims in the report.
After foreign media, articles have also been published in Gujarati media on this issue. Gujarat Samachar published an article on August 28 and claimed that Trump’s 50% tariff will put more than 50 thousand jobs in Surat’s diamond-textile industry at risk. The report claims that 30% of Surat’s diamond industry trade is with America, so Trump’s tariff could hit this industry hard,
What is the truth?
From a larger perspective, this narrative is going to help America. Surat is the economic capital of Gujarat and Gujarat is the home state of Prime Minister Modi. The diamond industry has flourished in Surat over the years. If negative rumours are spread that Surat’s largest industry has been badly affected due to tariffs and changing global equations, then it works in Trump’s favour that he is really hurting PM Modi and his home state. However, we have to see that many of these things are not being reported in systematic context or using complete facts, and are directly or indirectly helping to set a wrong narrative.
It is a fact that there is a slowdown in the diamond industry of Surat, but this situation is not new. This is the situation for almost the last one year. Detailed reporting about this slowdown in the diamond industry can be seen in many reports during the last eight-ten months. At that time, Joe Biden was the President of USA, and there was no discussion about tariffs in global politics.
So, if the BBC had gone to the diamond factories of Surat before Trump came, it would have seen the same situation. Because as mentioned earlier, the diamond industry has been in recession for a long time.
Secondly, it is not that the diamond industry will be affected insignificantly due to the tariffs of America, but it is also a fact that Indian diamond businessmen have the upper hand in this. Moreover, India has the option of other markets, America does not have other suppliers who can export diamonds at that scale. There is high demand for diamonds in America, which only the Indian diamond industry can meet.
As far as the Diamond Bourse is concerned, it has been questioned ever since its inauguration, because many offices have not been opened there yet. Whatever the reasons, it is a separate discussion, but the tariff and the fact that the offices in the bourse are not functioning have nothing to do with it. Even when the tariff issue was not there, Diamond Bourse’s situation was the same as it is now. The reality is that the government is making continuous efforts to keep this bourse running.
What do the experts say?
When OpIndia contacted experts associated with the diamond industry of Surat on this matter, they also said the same thing. Jagdish Khunt, president of the Surat Diamond Association, completely dismissed the reports of a terrible recession in the diamond industry due to the US tariffs and said that the media has fabricated most of these things.
Talking about the recession, Khunt said that Surat has been witnessing a recession for the last two years and it has increased during the past year. This has been the situation since before there was any tariff dispute. Talking about the impact of the tariffs, he said that the impact of the US tariffs on the diamond industry will be there in the short term, but in the long term, it will be manageable.
‘America is dependent on India, even if there is a loss, it will be short-term’
Talking about the reasons, he said that currently Surat is supplying diamonds to all the countries of the world. About 90% of the production of diamonds is being done only from India and America also knows that very well. Therefore, no country in the world is able to export that quantity of diamonds to America or fulfill its demand. Today, America is completely dependent on India for diamonds, no country can take India’s place. Therefore, if the tariff is increased, the loss will be to the common Americans and ultimately the demand for diamonds will increase and internal dissatisfaction will also arise.
He said that even if America remains firm on the tariffs, India will not suffer. Explaining the reason, he said that the loss will be compensated by sending the same diamonds that were being sent to America to other countries of the world. Talking about the importance of diamonds in America, he said, “Today, in India, gold is very important for weddings. Similarly, diamonds are important in America. If the locals there do not get diamonds, there is a possibility of protests or they will buy diamonds even at expensive prices. Because diamonds are a part of their social life.”
Explaining all these reasons, he said that the diamond industry is not likely to face any problem due to tariffs because the demand for diamonds is highest in America and only India can fulfill that demand. Therefore, America is completely dependent on India. But, it is not like that in India’s case. India is not dependent only on America. India sends diamonds to almost all the countries of the world. Even if it stops exporting to America, it can compensate by exporting more diamonds to other countries.
Reports that the recession was caused by tariffs are false
Bhavnagar Diamond Association President Ghanshyam Gorasia also shared the same thing in a discussion with OpIndia. He said that the effects of tariffs will definitely be there, but it has not caused and cannot cause a recession. He also gave the same argument that diamonds are very important in America, just like gold is in our country. Therefore, even if diamonds become expensive, they are important for the Americans and they will buy them, but if they don’t, India will be able to sell them to other countries. But here too, the loss is to America, because it will not be able to get diamonds from any other country except India.
Thakarshibhai Patel, who manages about 10-12 factories in the diamond industry in Surat, has also supported the statement of the presidents of both the associations. He said in a conversation with OpIndia that no one can deny that there is a recession, but that recession is not due to the American tariffs. He also said that the US tariff may have some effects, but that too only for a short period. Another factory owner, Laxmanbhai, has also said the same. Apart from that, some jewelers have also repeated this.
However, news about the recession was also published in Gujarati media reports in 2024. At that time, there was no tariff dispute. Therefore, it is proven that there is a recession in the diamond industry of Surat, but it is also proven that the recession has not come because of the US tariff. Rather, the diamond industries have even formulated a plan to sell to other countries as an alternative to the US tariff. However, many steps have been taken by the government in this regard. According to Jagdishbhai Khunt, both the state government and the central government are currently with the diamond industry and when needed, they always adopt a positive attitude for the industry.
