Gems and jewellery exports fall to 5-year low

1. At a Glance

• India's gem and jewellery (G&J) exports fell to $27.72 billion in FY 2025-26, the lowest in five years, driven by steep decline in shipments to the US, its top buyer [1].
• The sector is examinable both as a trade/tariff case study (US reciprocal tariffs) and as a structural sector (7% of GDP, major employer, Surat hub) [3].
• Ties together UPSC-relevant themes: bilateral trade friction, export promotion architecture, and India-US trade negotiations.

2. Why in the News

• GJEPC (Gem and Jewellery Export Promotion Council) announced on 15 April 2026 that FY 2025-26 exports fell 3.3% year-on-year to $27.72 billion, down from $28.7 billion in FY 2024-25 — the lowest since 2020-21 (COVID-disrupted year) [1].
• Exports to the US nearly halved, falling 45% year-on-year to $5.09 billion, after Washington imposed reciprocal tariffs and later an additional 25% duty on Indian goods [1].
• Partial relief: a newly announced India-US trade deal restores tariff access for G&J at 18%, projected to lift exports by up to $3 billion in the near term [1].

3. Background & Evolution

• G&J has long been declared a focus sector for export promotion by the Government of India [3].
• GJEPC, under the Ministry of Commerce and Industry, is the nodal export promotion council for the sector, alongside the Indian Diamond Institute (IDI), Surat [3].
• The EP(G&J) Division of the Department of Commerce is the nodal point for implementation of the Kimberley Process Certification Scheme (KPCS) — the international mechanism against conflict diamonds [3].
• Exports had shown recovery post-pandemic (e.g., 71% surge in Apr-Dec 2021 over the previous year) before the current tariff-driven slump [4].

4. Core Static Facts

5. Multi-Dimensional Analysis

Economic

• Sharp US demand contraction directly hit forex earnings and Surat's diamond-cutting/polishing employment base [1][3].
• Sector's high dependence on a single market (US) exposes vulnerability to bilateral tariff shocks.

Geopolitical/Strategic

• Reflects broader US "reciprocal tariff" policy and additional 25% duties imposed on Indian goods, part of wider US-India trade tension [1].
• The subsequent India-US trade agreement framework (18% tariff restoration) signals negotiated de-escalation and shows trade diplomacy's direct sectoral impact [1].

Administrative

• GJEPC (industry body) versus Department of Commerce (policy) — aspirants often confuse promotional council functions with government ministry functions [3].
• KPCS administration shows India's role in an international regulatory regime embedded within a trade promotion division [3].

Social

• Sector employs over 50 lakh workers, many in MSME/artisanal clusters (Surat), making tariff shocks a livelihood issue, not just a trade statistic [3].

6. Recent Developments (last 12-18 months)

• July 2025: G&J exports recorded 28.95% growth YoY for the month, before the tariff impact deepened later in the fiscal year [3].
• 2025: US imposed reciprocal tariffs, later adding a further 25% duty on Indian goods, disrupting shipments for several months [1].
• 15-16 April 2026: GJEPC reported FY 2025-26 full-year exports at $27.72 billion, a 5-year low [1].
• 2026: India-US trade agreement framework announced, restoring G&J tariff access at 18%, expected to add up to $3 billion in exports [1].

7. Prelims Hooks

• GJEPC = Gem and Jewellery Export Promotion Council [1][3].
• FY 2025-26 G&J exports: $27.72 billion — lowest in 5 years [1].
• Previous 5-year low was FY 2020-21, due to COVID-19 lockdowns [1].
• FY 2025-26 exports fell 3.3% YoY, from $28.7 billion (FY 2024-25) [1].
• US-bound G&J exports fell ~45% YoY to $5.09 billion [1].
• US imposed reciprocal tariffs plus an additional 25% duty on Indian goods [1].
• India-US trade deal restores G&J tariff access at 18% [1].
• Indian Diamond Institute (IDI) is located in Surat, Gujarat [3].
• Surat hosts 450+ organised G&J manufacturers/importers/exporters [3].
• G&J sector contributes ~7% of India's GDP and employs 50+ lakh people [3].
• Nodal government division: EP(G&J) Division, Department of Commerce [3].
• India's EP(G&J) Division implements the Kimberley Process Certification Scheme (KPCS) [3].
• KPCS is an international certification mechanism to curb trade in conflict/"blood" diamonds.

8. Mains Relevance

• GS-III: Indian Economy — effects of liberalization on economy, changes in industrial policy; Foreign trade, tariffs, export promotion.
• GS-II: International relations — bilateral agreements (India-US trade deal) and their impact on Indian economic interests.
• Possible question stems: 1. "Discuss the impact of unilateral tariff measures by major trading partners on India's labour-intensive export sectors, with reference to the gems and jewellery industry." (GS-III) 2. "Examine how bilateral trade agreements can serve as tools of economic recovery for sector-specific export shocks. Illustrate with a recent example." (GS-II/III) 3. "Critically evaluate India's institutional framework for export promotion in traditional sectors such as gems and jewellery." (GS-III)

9. Related Topics to Study Next

• US reciprocal tariffs policy — direct cause of the export decline; broader US trade posture.
• India-US Trade Agreement/BTA negotiations — the mitigating framework referenced.
• Kimberley Process Certification Scheme — international regulatory angle tied to GJEPC's mandate.
• MSME export promotion schemes — Surat's manufacturing base is largely MSME-driven.
• Foreign Trade Policy 2023 — overarching export promotion framework.
• Special Economic Zones (SEZs), e.g., SEEPZ — relevant to G&J processing/export units.
• Rupee depreciation and export competitiveness — macro factor affecting all export sectors.

10. Common Errors / Trap Areas

• Confusing GJEPC (industry export promotion council) with a government ministry — it operates under the Department of Commerce but is not itself a ministry [3].
• Mixing up the "5-year low" framing — the comparator low year is FY 2020-21 (COVID), not FY 2019-20 [1].
• Assuming the decline is purely demand-driven — the dominant cause was US tariff action, not weak global demand alone [1].
• Overlooking that relief (18% tariff) came from a subsequent trade deal, not from India's own policy easing [1].
• Conflating Indian Diamond Institute (IDI) location (Surat) with GJEPC headquarters (Mumbai) — they are distinct entities under the same division [3].