Following the US midterm election results, Indian jewelers are pushing for a bilateral trade agreement to support the struggling diamond industry in Surat. With exports dropping 44% in late 2025 and revenues facing stagnation, the sector is dealing with high tariffs and weak global demand. The industry is now monitoring whether the new political environment in Washington will lead to trade policy changes and help stabilize manufacturing operations.
The US midterm election results, which saw the Democratic party secure control of both the House and the Senate, have prompted the Indian gems and jewellery sector to renew its call for a bilateral trade agreement. Industry leaders and trade bodies believe this political shift could accelerate discussions on trade barriers, which currently impose high tariffs on Indian cut and polished diamonds entering the US market.
Surat, the critical manufacturing hub for India’s diamond industry, remains under significant pressure. The sector has struggled with factory shutdowns and job losses, fueled by a sharp downturn in export performance. Recent data indicates that gems and jewellery exports to the US fell by approximately 44% year-on-year during the April–December 2025 period. This decline has highlighted the industry's vulnerability to global geopolitical shifts and protectionist trade measures.
Financial outlooks for the current fiscal year remain cautious, with total industry revenue for natural diamonds projected to stay flat. Analysts point to a combination of persistent tariff-related uncertainty, high operating costs, and inconsistent global demand as the primary problems preventing a recovery. The sector is currently prioritizing revenue stabilization, as companies navigate a landscape where profit margins are constrained by external policy factors rather than just operational efficiency.
For investors, the key monitorable remains the potential for a formal trade agreement. The Indian industry has often relied on executive-level trade measures, which provide temporary relief but lack the long-term certainty of a structured deal. Until a stable trade framework is established, firms with high exposure to the US market may continue to face volatility. The primary risks for the sector include further job contraction in Surat if exports do not rebound and the ongoing impact of global macroeconomic instability on demand patterns.
Moving forward, the industry will track any official communication from Washington regarding trade policy adjustments. Investors should look for updates on export volume trends and any signs of renewed demand in the US, as these will be essential for gauging the pace of a potential recovery in the Indian gems and jewellery manufacturing base.