Tariff-Hit Gems and Jewellery Sector May Benefit from Government’s SEZ Overhaul

Govt’s SEZ Overhaul May Offer Relief to Gems and Jewellery Sector Battling Tariff Pressures

Amid weakening global demand and steep tariff actions from the United States, Govt’s SEZ overhaul may offer relief to gems and jewellery sector firms struggling to remain competitive. The Union government has begun drafting a sweeping redesign of India’s Special Economic Zone (SEZ) framework, a move that industry leaders say could help stabilise an export segment facing one of its toughest phases in years.

With the gems and jewellery sector accounting for a large chunk of India’s export earnings, and nearly 65 percent of studded jewellery exports coming from SEZ units, policymakers are now urgently examining structural changes that can strengthen SEZ operations and improve linkages with the domestic market.

New SEZ Norms Aim to Support Units Hit by US Tariff Measures

The proposal comes as India’s shipments to its biggest jewellery export market—the United States—have suffered a sharp decline. Government data shows that between April and September 2025, total gem and jewellery exports to the US fell 40.28 percent to $2.77 billion, while exports of cut and polished diamonds plunged 53.62 percent to $1.17 billion.

Against this backdrop, Govt’s SEZ overhaul may offer relief to gems and jewellery sector stakeholders who have been grappling with slower order volumes, pricing uncertainty, and disrupted inventory cycles.

A government panel comprising officials from the commerce ministry, finance ministry, NITI Aayog, and major export bodies is reviewing measures that can make SEZs more resilient during global downturns. The proposed reforms include:

• Easier sales into the Domestic Tariff Area (DTA) with more favourable duty structures

• Permission for reverse job work, allowing SEZ units to take up domestic processing work when export orders fall

• Simpler operational rules enabling companies to switch between export and domestic operations without complex compliance burdens

Officials say these measures will reduce idle capacity, protect skilled jobs, and improve long-term sustainability for export-focused manufacturers.

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Industry Welcomes Reforms to Smooth Out Volatility

Kirit Bhansali, Chairman of the Gem and Jewellery Export Promotion Council (GJEPC), welcomed the government’s approach and emphasised its potential impact on the sector. He noted that SEZ units are often the worst affected during periods of export slowdown because existing rules restrict them from taking on domestic contracts.

“These SEZ units are hit hardest when export demand weakens,” Bhansali said. “If the government allows reverse job work, limited DTA sales and smoother movement between export and domestic operations, it will help manufacturers retain skilled workers and manage inventory more efficiently.”

According to him, Govt’s SEZ overhaul may offer relief to gems and jewellery sector companies by improving their adaptability at a time when US tariff measures have created uncertainty in production cycles and profitability.

US Tariffs Have Intensified Pressure on India’s Jewellery Exporters

The recent US tariff hikes—targeted particularly at high-value items such as jewellery and diamonds—have left exporters scrambling to manage operational costs. Industry representatives say the duties have led to a direct reduction in order volumes, causing ripple effects across production, logistics, and sourcing.

Manufacturers in SEZs, who depend heavily on foreign demand, are now forced to cope with:

• Unpredictable pricing cycles

• Surplus inventory

• Lower utilisation of labour and machinery

• Delays in new order placements

By permitting more flexible DTA sales and reverse job work, policymakers hope to give exporters a buffer to withstand these global shocks.

SEZ Reforms Expected to Improve Logistics and Operational Efficiency

Beyond cushioning immediate tariff-related pressures, the broader SEZ overhaul is expected to boost long-term competitiveness. Bhansali noted that improving logistics efficiency, reducing compliance burdens and speeding up cross-border movement would significantly strengthen India’s jewellery supply chain.

“We need SEZs to function as seamless export hubs with clearer rules, quicker clearances and better integration with global supply chains,” he said. Measures such as streamlined documentation, better digital processing, and expanded sourcing routes could create an environment where firms operate with greater predictability.

With Govt’s SEZ overhaul may offer relief to gems and jewellery sector, industry players say the reforms could help India capture emerging market opportunities even as American demand fluctuates.

Sector Diversifies Export Destinations Amid Changing Global Dynamics

In response to declining US orders, jewellery companies are actively diversifying their export footprint. Firms are exploring growth in Latin America, Saudi Arabia, Cambodia and Vietnam, while also deepening ties with FTA partners such as the UAE and Australia.

This diversification push aligns with the goal of reducing market concentration risks and building a more resilient export base.

A Crucial Moment for India’s Jewellery Export Engine

As the government prepares the final blueprint for an SEZ overhaul, expectations are rising across the industry. The combination of flexible domestic sales, operational ease, and improved logistics could mark a turning point for one of India’s most globally integrated sectors.

For thousands of SEZ-based jewellery units, Govt’s SEZ overhaul may offer relief to gems and jewellery sector firms striving to navigate a difficult export environment—one shaped by rising tariffs abroad and growing cost pressures at home.

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