India's gems and jewellery sector just caught a lifeline, and investors are scrambling to get in.
After watching exports to the United States collapse by over 55% in nine months, the industry got exactly what it needed: massive tariff relief. The India-US trade deal announced on Feb. 3 slashed tariffs from a crushing 50% to 18%, with some products receiving zero-duty access.
The stock market's reaction was immediate. Goldiam International surged 17% in a single session. Kalyan Jewellers jumped nearly 15%. Even smaller players like Vaibhav Global and Senco Gold posted double-digit gains.
For an industry that had been on life support, this was oxygen.
The Crisis That Nearly Killed an Industry
To understand why this trade deal matters, you need to see just how bad things got.
Between April and December 2025, India's gems and jewellery exports to America fell from $8.7 billion to just $3.9 billion.
The culprit was tariffs. When the US cranked rates up to 50% on gems and 55-57% on finished jewellery, Indian exporters simply couldn't compete. Cut and polished diamonds, which had generated $3.6 billion in fiscal 2024, brought in just $1.5 billion the following year. A 60% drop.
The human cost was even worse. More than 800,000 artisans in Surat, Mumbai, and Ahmedabad saw their working hours slashed. The Diamond Workers Union reported nearly 100 suicides linked to industry distress.
These weren't just statistics. These were artisans who'd spent decades perfecting their trade, suddenly watching orders dry up.
What Actually Changed in the Trade Deal
The Feb. 3 agreement rewrote the rules entirely.
For natural diamonds and major gemstones? Zero tariffs. That's right-zero. Once the interim agreement is signed (expected in March 2026), Indian exporters of cut-but-not-set natural diamonds will not pay any duties.
For finished jewellery, tariffs dropped from 31% to 24%. That's a 7-percentage-point reduction that translates directly to margin improvement.
Lab-grown diamonds also received relief, falling to an 18% tariff from 25%.
Here's why this matters: At 50% tariffs, most Indian exporters were losing money on every shipment. The math simply didn't work. Now? They can actually turn a profit again.
The $61 Billion Opportunity Nobody's Talking About
The United States isn't just another market for Indian jewellers. It's the market.
The U.S. represents a $117 billion annual gems and jewellery market. Before the tariff crisis, the U.S. accounted for one-third of jewellery imports from India. In fiscal 2024-25, that translated to $9.23 billion in exports-India's single largest market for gems and jewellery.
Think about that for a second. One country. Nine billion dollars. Nearly a third of total exports.
The trade deal doesn't just restore access to this market. It improves access to certain products beyond pre-crisis levels.
Indian manufacturers now have zero-duty access to a $29 billion segment that includes major gemstones such as diamonds and platinum,
Which Stocks Are Actually Worth Buying?
Not all gems and jewellery stocks are created equal. The market's already sorting winners from also-rans.
Titan Company is the 800-pound gorilla-India's largest jewellery company by market cap. But here's the problem: At 70x forward earnings, you're paying a massive premium, given EPS growth is forecast at 26% annually over the next three years.
Yes, Titan has superior execution and brand strength. Its jewellery segment grew 40% year over year in Q3 FY26, generating Rs 22,517 crore in revenue. Its return on equity sits at a healthy 21.33%.
But when you're paying 70 times earnings, you need perfection. And perfection is a tough bet.
Kalyan Jewellers offers better risk-reward. Trading at 30 times earnings-still expensive, but nowhere near Titan's stratospheric levels-the stock jumped 15% on the trade deal announcement.
Investors believe Kalyan is better positioned to capitalize on the export recovery than its larger rival. The mid-cap size provides more room for earnings acceleration.
Goldiam International is the highest-beta play. Up 17% on the trade deal news-the biggest single-day gain among all jewellery stocks-Goldiam is clearly the market's favorite for maximum upside.
The company's smaller size means export growth hits earnings harder. If Goldiam executes, returns could be outsized. But the volatility cuts both ways.
Why India Wins Long-Term
The tariff relief is nice. But the real opportunity is structural.
Indian gems and jewellery manufacturers have built competitive advantages that extend well beyond cheap labour. Surat alone is home to over 400,000 diamond cutters and polishers-an ecosystem that took decades to develop.
These craftsmen can cut and polish diamonds at 30-40% lower cost than Western manufacturers while maintaining quality standards. That cost advantage doesn't disappear when tariffs change.
The supply chain ecosystem is equally important. Hundreds of Tier-1 and Tier-2 suppliers enable rapid scaling and customization for US retailers. You can't replicate that overnight.
Indian manufacturers have also invested heavily in quality certifications and compliance with international standards. They're not just cheaper-they're good enough to serve demanding US luxury retailers.
The Risks Nobody Wants to Discuss
Let's be honest about what could go wrong.
- First, tariffs can change. Political winds shift. A new administration could reverse these benefits or impose new tariffs. It's happened before.
- Second, fashion trends matter more than you think. The lab-grown diamond market keeps growing, potentially cannibalizing natural diamond demand. If consumers decide they don't care whether their diamonds came from a mine or a lab, Indian natural diamond cutters lose.
- Third, raw material costs are rising. If rough diamond prices spike, they could offset the tariff benefits entirely.
- Fourth, execution risk is real. Not every company will successfully capitalize on this opportunity. Some will fumble the handoff.
- Finally, currency fluctuations could erase gains. A stronger rupee means US revenues convert to fewer rupees, potentially offsetting the tariff benefit.
The Bottom Line
The India-US trade deal transformed gems and jewellery stocks from a disaster zone to an opportunity overnight.
After a 55% collapse in exports that devastated 800,000+ artisans, the sector now faces a historic opportunity to recover. Tariffs dropped from 50% to 18%, with zero-duty access for natural diamonds and major gemstones.
The numbers support the thesis. Full export recovery could drive 140%+ revenue growth from crisis lows, translating to 25-40% earnings growth for well-positioned companies.
Just remember-this is a 2-3 year story, not a quick flip. The trade deal removed the barrier. Now companies need to execute.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
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