Gems and jewellery sector seeks RBI relief as 50% US tariffs hit exports

Facing a 50% US tariff on exports, the gems and jewellery sector has asked the RBI for loan relief and EMI support, warning of payment delays, job losses and sector-wide stress

The gems and jewellery sector, which is staring at a significant hit on its exports as the 50 per cent tariff imposed by the Donald Trump administration comes into effect from Wednesday, met senior Reserve Bank of India (RBI) officials virtually on Monday to seek relief on bank loans.

 

“We have said there will be disruption in receiving payments as new goods will not be supplied, and there could be delays in payments,” said Kirit Bhansali, Chairman, Gems & Jewellery Export Promotion Council (GJEPC). “In that case, banks should give us some relief on repayments of loans.”

 

The US accounts for around 30 per cent, or $10 billion, of India’s annual gems and jewellery exports.

   

“We told them that people in this sector are working very cautiously. We requested some relief from banks in terms of repayments,” Bhansali told Business Standard.

 

He said representatives of the sector also asked for additional loan facilities if needed, adding that the workforce could be severely impacted. “A large number of workers will also be affected. There are about 175,000 workers in places like Jaipur, Mumbai, and Gujarat who have taken loans for houses, vehicles, and education. We have requested that EMIs be elongated and some relief given if they lose their jobs,” Bhansali said.

 

The SEEPZ SEZ, for example, which employs 50,000 people, sends 85 per cent of its exports to the United States.

 

He added that the performance of the gems and jewellery sector had been robust in recent years and there had been no issues of non-performing assets (NPAs).

 

RBI data shows a significant improvement in asset quality in the segment. The gross NPA ratio of the gems and jewellery sector moderated from 16.5 per cent at end-March 2023 to 6.7 per cent in March 2024 and 5 per cent at end-September 2024.

 

Overall, 70 per cent ($55 billion) of India’s exports to the US are now under serious threat, according to a Barclays report. India faces a 25 per cent reciprocal tariff combined with a 25 per cent secondary tariff (a penalty for purchasing Russian oil), taking the total US import tariff to 50 per cent.

 

“India’s top exports to the US — electrical machinery and gems and jewellery — face the largest tariff increases compared with US tariffs at the start of the year,” the Barclays report said.

 

The banking regulator is meeting representatives from various sectors to gauge the extent of the impact due to US tariffs. RBI officials will meet leather and textile sector representatives in the coming days.