Zero Duty, Fresh Momentum: Why India’s Gems and Jewellery Export Story Is Back in Focus After the EU Deal
For a sector that has quietly battled thin margins, rising compliance costs and slowing demand from the US, the India–EU free trade agreement signed on January 27 has arrived like a long-awaited tailwind. The elimination of a 4 percent import duty on Indian gems and jewellery exports to the 27-nation European Union is not just a policy headline — it is a direct margin booster, a competitiveness reset and, for investors tracking export-linked businesses, a signal worth paying attention to.
In a market that is increasingly rewarding earnings visibility and sectoral clarity, this development has put India’s gems and jewellery ecosystem back into conversations on trading desks and in portfolio reviews.
The India–EU FTA delivers a clear, measurable benefit for exporters
Under the agreement, tariffs on Indian gems and jewellery exports to the EU will fall from 4 percent to zero. While 4 percent may appear modest on paper, industry participants point out that this is meaningful in a business where pricing is razor-thin and buyer negotiations are intense.
The duty elimination is expected to:
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Improve price competitiveness of Indian exporters in Europe
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Help reclaim market share lost to rival manufacturing hubs over the past decade
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Support exporters at a time when US-bound shipments face pressure due to higher tariffs
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Encourage deeper relationships with European wholesalers and global brands
The European Union is already a significant market for Indian exporters, especially in polished diamonds, gold jewellery and studded jewellery. According to a Jefferies report, gems and jewellery exports to the EU accounted for about 3 percent of India’s overall exports to the bloc between January and November 2025.
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Why even a 4 percent tariff change can reshape sourcing decisions
In sectors such as engineering or pharmaceuticals, a 4 percent duty change may be absorbed more easily. In jewellery, it often becomes the difference between winning and losing an order.
Global buyers in Europe typically compare suppliers across India, Southeast Asia, and other manufacturing hubs where preferential access already exists. With tariffs removed, Indian manufacturers are now placed on a more equal footing — not just on cost, but also on reliability, turnaround time and design capabilities.
Industry experts note that India’s strengths lie in:
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Design-led craftsmanship
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Precision cutting and polishing
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Large-scale manufacturing ecosystems
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Ability to deliver quickly at scale
Zero duty enhances these advantages rather than replacing them.
Export hubs like Mumbai, Surat and Jaipur stand to gain the most
The potential impact is not evenly distributed. Established clusters with export-ready infrastructure are expected to benefit faster and more meaningfully.
Mumbai’s trading ecosystem, Surat’s cutting and polishing dominance, and Jaipur’s coloured gemstone expertise are seen as natural beneficiaries. These centres already have deep integration with European buyers, and improved price competitiveness could accelerate order flows rather than create entirely new demand.
The shift is particularly important for small and mid-sized exporters, many of whom previously had to either absorb the 4 percent duty into margins or risk losing business. With that burden removed, their ability to compete improves materially.
Here’s what happened today and why traders reacted
What moved the market today
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Market participants digested details of the India–EU FTA, including zero duty on gems and jewellery exports
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Export-linked sectors saw renewed discussion, particularly around MSME-heavy industries
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Analysts and institutional investors began factoring sectoral beneficiaries into thematic views
Why traders reacted the way they did
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Short-term traders remained selective, as there was no single listed stock directly reporting earnings today on this news
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Positional traders began exploring jewellery exporters and ancillary businesses as potential medium-term plays
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Broader market sentiment improved marginally due to the idea of export-led tailwinds
What signals investors are tracking now
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Whether listed jewellery exporters reference improved EU order flows in upcoming commentary
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How quickly exporters convert tariff benefits into higher volumes rather than only margins
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Whether European demand improves across plain gold and studded jewellery categories
The reaction has been more analytical than emotional — a sign that markets are treating this as a structural theme, not a speculative spike.
Expert views suggest the deal goes beyond tariffs alone
Gulzar Didwania, Partner at Deloitte India, framed the agreement as more than a simple tax reduction. “EU being India’s second largest trade partner, the FTA comes at a moment of geoeconomic realignment and strategic urgency. While tariff reductions provide a competitive advantage to both economies for sectors such as auto, textile, capital goods, gems and jewellery etc, it also offers an opportunity to address non-tariff barriers through regulatory alignment,” he said.
He added that the agreement is expected to be among India’s most progressive FTAs, with commitments around digital trade, sustainability and climate rules, including CBAM. For jewellery exporters, this underscores an important reality: while zero duty is a clear advantage, compliance and transparency will increasingly shape long-term success.
Why compliance and sustainability will still define who wins
Exporters themselves caution that tariff relief is not a silver bullet. The European market is highly sensitive to issues such as traceability, responsible sourcing and sustainability. Buyers are increasingly demanding documentation and transparency across the supply chain.
That means companies that invest in systems, certifications and ethical sourcing practices are more likely to convert tariff benefits into sustained growth. Those who rely purely on price advantage may find the window narrower.
Yet by removing a structural cost disadvantage, the India–EU FTA improves the odds for the entire ecosystem — especially for organised players who are already aligned with global standards.
What this means for investors looking at export-linked themes
For investors, this development strengthens the case for tracking export-oriented segments beyond IT and pharmaceuticals. Gems and jewellery is a labour-intensive, value-added industry with deep linkages to MSMEs, employment and regional economies.
The potential impact includes:
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Improved earnings visibility for export-focused jewellery manufacturers
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Higher order stability if EU demand deepens
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Better margin protection for small and mid-sized exporters
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Long-term employment and ecosystem benefits that support sector sustainability
It also introduces a new narrative for stock selection: companies with strong European exposure, better compliance frameworks and scalable operations may start attracting differentiated attention.
What impacted the market today, and what could unfold next
What impacted the market today?
Sentiment improved around export-oriented sectors following clarity that tariffs on gems and jewellery exports to the EU will fall to zero under the India–EU FTA.
What is the impact on investors?
Long-term investors gain a new structural theme to track: export competitiveness in labour-intensive manufacturing. It encourages deeper evaluation of jewellery exporters and related businesses.
What is the impact on traders’ portfolios?
Short-term impact remains selective, but positional traders may begin building exposure to stocks perceived as beneficiaries, especially on dips.
What could happen in the coming days?
Attention is likely to shift to company commentary, analyst notes and management guidance. If exporters begin confirming stronger EU demand or improved pricing power, the sector could see more sustained interest.
For now, the zero-duty announcement has done something important: it has reopened a sectoral narrative that had been quietly fading. And in markets, when narratives return with credible policy backing, they tend to stay longer than many expect.
