The US will scrap tariffs on Indian gems and natural diamonds under a new trade agreement, paving the way for duty-free exports as the two countries move toward a broader trade deal.

A joint US-India statement, issued February 6, confirmed that the US intends to eliminate tariffs on Indian gems and diamonds – which are included in the Annex III list – once the “Interim Agreement,” a precursor to a broader US-India Bilateral Trade Agreement (BTA), is concluded. No implementation date was specified. 

Annex III, or the “Potential Tariff Adjustments for Aligned Partners" of US President Donald Trump's September 2025 executive order, identifies an expansive range of products eligible for potential zero reciprocal tariffs.

Earlier, Trump reduced tariffs on Indian goods from 50 per cent, effectively removing the 25 per cent duty linked to Russian oil imports while the remaining 25 per cent was further cut to 18 per cent pending conclusion of the trade agreement.  

In the Indian jewellery industry, this meant tariffs of 18 per cent for cut and polished diamonds and lab-grown diamonds, and 24 per cent for jewellery, which also includes a most-favoured nation (MFN) tariff of 6 per cent. There are no MFN duties on diamonds. 

Until the agreement is signed however, gem and diamond exports remain subject to duties of 25 per cent; 31 per cent for jewellery; and 25 per cent for lab-grown diamonds.

The Gem and Jewellery Export Promotion Council (GJEPC), in a circular issued February 7, remarked, “If and when the benefits of Annex III are implemented, cut and polished diamonds are expected to become fully duty-free.”

Lab-grown diamonds and jewellery, which are not included in Annex III, will continue to be subject to the 18 per cent and 24 per cent tariffs, respectively. In addition, US-made jewellery castings that are set or finished abroad are considered of US origin and are tariff exempt.