India turns to Gulf jewellery market to offset US tariffs

Exporters and brands explore production hubs in region to benefit from zero-duty access under Cepa

The Gold Souk in Dubai. India has recorded a 60 per cent growth in gold jewellery exports over the past three years under an agreement with the UAE. Getty Images

The Gulf is gaining traction as an alternative manufacturing and export hub for Indian jewellery, driven by rising American tariffs, experts say.

US President Donald Trump signed an executive order on Wednesday imposing an additional 25 per cent tariff on India over what the US says are the country's continued purchases of Russian oil.

The order doubles the tariff rate Mr Trump will charge on Indian imports to 50 per cent, among the steepest charges on US trading partners. The latest tariff is due to take effect in three weeks, according to the executive order.

Trump announces increased tariffs on India

Read More

On Tuesday, India's biggest jeweller and watchmaker, Titan, said it was exploring the Gulf region “as a manufacturing base to export to the US”.

Titan managing director C.K. Venkataraman said on Tuesday that the US is now a less feasible manufacturing base due to cost and skills constraints, especially for artisan-made jewellery.

Now it's looking to Gulf countries, including the UAE, which faces a lower 10 per cent tariff under Mr Trump’s baseline rate.

Titan, which is part of the Tata Group conglomerate that pulled in revenue of $165 billion in 2023-2024, announced plans to buy a 67 per cent stake in Dubai-based luxury retailer Damas.

This is part of a greater trend of global companies seeking new ways to avoid trade barriers, as the US levies tariffs on international trade partners.

US market gap

India’s $32 billion gem and jewellery industry is poised to “bear the brunt” of Mr Trump’s 25 per cent tariffs on Indian goods, which will take effect from August 7, according to Vijay Valecha, chief investment officer at Dubai-based Century Financial.

Last year, the US imported approximately $10 billion worth of jewellery from India, accounting for 35 per cent of India’s gem and jewellery exports in 2024.

The Indian jewellery industry employs nearly 5 million people and is responsible for almost 7 per cent of its gross domestic product, making it a key focus area for the government in terms of export promotion.

As a result, India is seeking alternative markets for its gems and jewellery, with the Gulf being the top contender, given its lower trade barriers, cultural affinity, geographical proximity, and free trade agreements with India, Mr Valecha explains.

“US tariffs on Indian jewellery have surged [up to 25 per cent to 27 per cent] as of August 2025, sharply eroding India’s competitiveness in its single-largest export market. As a response, Indian exporters and the Gems & Jewellery Export Promotion Council [GJEPC] have been actively exploring alternative markets, especially in the Gulf, but also in Latin America and Southeast Asia,” says Nicolas Michelon, managing partner of Alagan Partners, a Dubai corporate geopolitics consultancy.

“Under the India-UAE Comprehensive Economic Partnership Agreement, jewellery exports have seen a 60 per cent growth in gold jewellery and 17 per cent in diamond jewellery over the past three years, making the UAE a top destination and a gateway for India’s exports into the wider Gulf region.”

Saudi Arabia, in particular, is being positioned as a major target market, he says. The GJEPC is organising the Saudi Arabia Jewellery Exposition (Sajex) 2025 in Jeddah, positioning the kingdom’s jewellery market (which is projected to double to $8.3 billion by 2030 from $4.6 billion in 2024) as a high-potential growth destination, Mr Michelon said.

The Indian gems and jewellery sector is the country’s third-largest export to the US, after engineering and electronic goods.

Exports of cut and polished diamonds, which account for almost half of India’s gem and jewellery shipments, have fallen 17 per cent on an annual basis to just over $13 billion in the year to March, according to the GJEPC.

However, the government-backed agency said in a report last year that there are emerging opportunities in the Middle East, with exports of Indian studded gold jewellery to Saudi Arabia rising annually by 26.05 per cent and those to Kuwait jumping by 87.99 per cent in the second quarter of 2024.

Watch: Dubai's gold traders say demand for raw product up amid broader sales slump

Dubai's gold traders say demand for raw product up amid broader sales slump

01:27

Easier partners

The GJEPC said the “traditional strongholds like the US and China” have faced challenges due to various economic factors.

Exporters from Mumbai’s Santacruz Electronics Export Processing Zone, one of the main contributors to India’s gem and jewellery exports, recently saw US jewellery orders drop by close to 70 per cent, and are actively seeking to pivot away from the US to Saudi Arabia, Australia and the EU, Mr Michelon points out.

“With rising tariffs in traditional markets, Indian jewellers are exploring more cost-efficient and strategically located options,” according to Amreen Iqbal, founder of wearable jewellery brand Piece of You.

“The Cepa between India and the UAE, for instance, has significantly enhanced bilateral trade in gems and jewellery. The region’s robust infrastructure, free zones, and logistical connectivity make it a compelling choice not only for market expansion but also for establishing manufacturing and distribution hubs.”

There has been a “notable shift” in how Indian jewellery brands are approaching the Gulf, Ms Iqbal explains.

They are increasingly participating in regional B2B trade platforms and there is growing interest in setting up local manufacturing units, particularly in the UAE, she says.

Mr Michelon points to how Gulf fairs like Sajex 2025 are drawing hundreds of Saudi buyers and top-tier Indian exhibitors, with strong backing from Indian embassies and trade commissions in the region.

Leading Indian jewellery manufacturers and retailers are also considering relocating production to the UAE or Oman so that goods qualify as originating from jurisdictions with lower US tariffs, he adds.

Indian jeweller Titan said it would acquire a 67 per cent stake in Dubai-based luxury jewellery retailer Damas. Jaime Puebla for The National

Titan's majority stake acquisition of Damas last month is valued at Dh1.04 billion ($283.2 million) and seeks to expand its presence in the Gulf.

“Titan views the Damas network not only as a straight expansion of retail presence, but also as a potential manufacturing base within the Gulf to preserve favourable tariff access into the US,” Mr Michelon says.

“This move mirrors a strategic logic of retail expansion and tariff arbitrage: using the Gulf as both a destination and manufacturing pivot to offset US trade barriers.”

Echoing the same thoughts, Mr Valecha says Indian jewellers are strategically targeting the acquisition of Middle Eastern retail chains to enhance their access to Gulf markets.

“This is the second time Titan has attempted to secure a deal with Damas, and the previous attempt fizzled out due to disagreements over valuation. The potential deal is estimated to be valued at approximately 45 billion Indian rupees, equivalent to around $518 million,” he estimates.

Mr Michelon believes, given the current trade policy climate and continuing structural shifts, there is a “strong likelihood” of more such deals in the near future. Many Indian exporters and brands are exploring production hubs in the UAE and Oman, both to benefit from zero-duty access under Cepa and to navigate around US tariffs by manufacturing within Gulf jurisdictions.

As a result, other major jewellery exporters are already building up Gulf operations and could follow suit with further investments, joint ventures or acquisitions to strengthen regional manufacturing and retail relevance, he adds.

Indian jewellery firms are moving towards integrated value chains within international hubs, as opposed to remaining in a passive export model, according to Vidya Mahambare, professor of economics and director of research at the Great Lakes Institute of Management in Chennai, India.

"Now that the UAE-India Cepa is operational, we envision many more collaborations that serve regional markets while optimising expense structures," she says.