In the once-packed streets of Surat, Gujarat, the dissonance of polishing machines and voices has lulled to a halt. A sign of life in the streets of the diamond capital of India has been replaced with an unsettling hum of hundreds of thousands’ uncertain futures. The cause? A hike in U.S. tariffs amounting to 50 percent under the Trump administration. Thousands of diamond cutters are now facing unemployment, a reminder of the inherently fragile scaffolding upon which India’s economy has historically relied.
However, amidst the silence, there lies a story of the importance of legacy, perseverance and adaptation. India’s path from colonial constraints to being the fastest-growing major economy is riddled with periods of transformation, where adversity has often instigated innovative economic policies. Indeed, the challenges posed by these tariffs act as another catalyst for policymaking, shaping Modi’s ‘Atmanirbhar Bharat’ policy of self-reliance. Yet, with the diamond industry’s collapse, calls to reassess and dismantle the vulnerable foundations of such neglected industries become louder and louder.
Surat’s diamond industry, which employs around 800,000 workers and sustains nearly 5 million livelihoods, has been a fundamental pillar of India’s exports. Polishing around 90% of the globe’s diamonds, this Indian city is where almost every diamond sold is cut and cleaned. It generates significant trade, with the U.S. serving as its single largest buyer, purchasing around $5 billion worth of stones in the last fiscal year. However, an apocalyptic wake has surfaced as the recent imposition of a 50% tariff on Indian gems has been placed: orders have been cancelled, factories are closing, workers are facing layoffs, and the beginning of a serious unemployment crisis shakes Gujarat, the home state of the current Prime Minister, Narendera Modi.
As opposition to Modi’s government grows from within the political nation, India struggles to form a united front during its shift towards an economic policy somewhat mirroring that of protectionism, when this is perhaps most needed. Since Trump’s “brokering” of a ceasefire between Pakistan and India in the long-disputed region of Kashmir in May earlier this year, the slogan “Narendra Surrender” has circulated. This slogan was spread by Rahul Gandhi, leader of the opposition in India’s parliament and grandson of the previous Indian Prime Minister, Indira Gandhi. Framed by the opposition, Modi is an incompetent victim of Trump’s bullying, whilst across the Pacific, Modi is the leader of Russia’s ongoing war against Ukraine, with a White House Official referring to the situation in Ukraine as “Modi’s war.”
It is precisely this rhetoric in the White House which has brought about these problematic tariffs. Since the invasion of Ukraine in 2022, India has become Moscow’s largest oil buyer with about 2 million of the 5 million barrels of crude oil it imports per day arriving from Russia, amounting to $140 billion fed into Russian oil markets. The issue of India’s oil trade is that it indirectly finances Russia’s war against Ukraine, freezing the Indian government in a perplexing moment of decision-making. Do they stop or reduce Russian oil imports and diversify their oil trade with the hopes of America’s tariffs disappearing, or do they, like Indira Gandhi did, treat the U.S. “as a friend, not a boss” and stand stoic and firm in their trade decisions?
Either way the Modi government chose to act, it was not acting with full independent agency. Rather, this agency was overshadowed by the colonial legacy of India’s economy and its inherent issue of overreliance on exports and, particularly, certain heavy industries.
Divesting oil from Russia and elsewhere would create “a significant tightness into market,” potentially increasing the price of crude from current levels of around $67 a barrel to over $80, says Premasish Das, head of analysis of oil markets in Asia at S&P Global Commodity Insights. Continuing to trade with Russia at its current rates would result in the feared 50% tariffs, which would make exporting to the U.S. incredibly hard, diminishing trade with India’s largest export partner.
With the 50% tariffs imposed upon India on August 27, 2025, the world witnessed the Indian economy’s dependence on the stability of geopolitics. Thus, the diamond and textile sectors in particular exemplify the broader tension between historical legacies and modern realities. The recent escalation of U.S. tariffs exposes far more than a short-term economic setback; it reveals the structural fragilities that have long underpinned India’s global trade. It is the neglected industries, like the diamond trade, heavily dependent on American consumers, that illustrate these issues and the risks of overreliance on a few markets in a volatile geopolitical environment. The contradictions of Modi’s self-reliance agenda become clearer: while framed as a path to economic independence, it is in practice constrained by historically entrenched dependencies and the absence of market diversification.
Under British rule, India’s trade was cultivated to serve primarily the British economy, allowing for the gradual dissolution of India’s export trade altogether. As H.H. Wilson notes, the British manufacturer “employed the arm of political injustice to keep down and ultimately strangle a competitor with whom he could not have contended on equal terms.” This forced millions of artisans into deprivation, as policies redirected demands towards British imports, and polluted India’s previously flourishing textile work as part of the ‘Silk Road.’ By the nineteenth century, the colonial government had turned India into a supplier of raw materials and a chronic consumer of imported British goods.
The East India Company, an English joint-stock company, was granted a royal order exempting the materials they purchased in India for export to Europe from inland duties, further limiting the success of local businessmen in their respective trades. In turn, this pushed such local artisans out of business and towards factory labour as a means to sustain their, and their families’, livelihoods. In 1813, Calcutta exported 2 million pounds of cotton goods to London, whereas by 1830, this trade dynamic was entirely reversed, with 2 million pounds of British cotton manufactures being imported into Calcutta. Romesh Dutt, in his ‘The Economic History of India, Under Early British Rule,’ identifies the methods used by the British Empire to establish a systematically dependent economy: “but England was unwilling…to become subservient to India in manufacturing industry. She strove for commercial supremacy.”
India’s independence in 1947 is yet another reminder of the way in which economic pasts and futures are inherently harboured by geopolitics. Following this liberalisation, Indian policy was largely shaped to dismantle any methods of colonial rule over the economy, instead embracing import substitution and protectionism under the Industries Development and Regulation Act of 1951. As state intervention became the way of navigating an unstable economy that remained detached from global trade (India’s trade deficit widening from $0.1 billion in 1948 to $6.3 billion in 1980), it became clear that the colonial legacy of India impacted more than just its culture, people, language and politics—it affected the capacity of the country to operate as a stable economy in the global market and the capacity of the local worker in a city like Surat to be prepared for the coming day.
As the 1991 liberalisation reforms marked a re-entry into the international economy with trading of IT services, petroleum, pharmaceuticals and oil and steel, India demonstrated the dangers of an economic policy such as Modi’s current hope for ‘self-reliance.’ It seems that in a global order defined by volatility, the notion of economic self-reliance becomes a gamble, for no nation can shield itself from the adversities of international politics. Without trade ties, it risks isolation; with them, it remains vulnerable.
So what does this mean for Modi’s government and the current economy of India?
Well, what has been made clear throughout studies of this nation’s economy is its irrevocable tendency to depend, whether that is on itself or on other nations. It is India’s colonial past that has permeated history and continues to define the path that economic policies undergo today. The creation of an economy dependent on Britain and robbed of artisanal businesses that did not provide success to the British Empire has moulded the Indian economy into that of a victim of colonialisation, chains it attempts to rid itself of to this day.
Surat’s current crisis is the product of a culmination of neglect and underinvestment in industries that were originally ignored more than a hundred years ago. What we see is the legacy of several structural vulnerabilities: over-reliance on single markets, lack of diversification, and labour market constraints.
Yet, what Surat perhaps most significantly exposes is the sheer impact that decisions single international leaders place have on the most common and ordinary lives across the globe, regardless of sociogeographic or economic borders. In the apocalypse of Surat rests a glimmer of hope.
India’s government has, in some ways, acted upon this opportunity for retrospection and reform. It has extended cotton import duty exemptions to support the weakening textile industry and continues to explore new and more reliable trade partners, such as the UK and China, in hopes of divesting their economy’s dependence on the U.S.
For India’s diamond industry, diversifying export markets and investing in technology and workforce development are necessary steps towards overcoming historical foundation issues. Surat’s craftsmen would benefit from specialised technical programmes designed to develop and spread their technical skills and adaptability in an increasingly competitive global market.
The challenges posed by U.S. tariffs on India that affect the diamond and textile sectors are significant and have triggered the unemployment of thousands. The President of the Gujarat Diamond Workers Union predicts it to”completely destroy” their industry. However, these are overcomable. Through reflecting on its past economy, its colonial legacies and patterns that permeate it, India could consider implementing reforms tailored to supporting the local artisans to support the industry’s sustainability and protect them from turbulent geopolitics.
In a moment of crisis, India is presented with an opportunity to transform its export economy whilst restructuring its colonial legacies from the foundations, policymaking starting with neglected industries at a grassroots level. Skills and training programmes, financial support in the form of low-interest loans, as well as health, accident and pension insurance for artisans and providing smaller cooperatives with the tools to negotiate more fairly within international trading systems, are all policies that would help the sustainability of such industries. They could incentivise small business owners to continue their trade as opposed to moving into what are viewed as more reliable industries that are currently untariffed, and prevent future impoverishment of local artisans as a result of such politics. Building a more secure diamond trade domestically, as part of the policy of ‘Atmanirbhar Bharat,’ would further insulate cities like Surat.
The recent tariffs have exposed structural weaknesses in India’s economy that trace back to its colonial past, leaving artisans and small business owners at the mercy of geopolitical shifts far beyond their control. For the diamond cutter in Surat or the textile weaver in Varanasi, the consequences of decisions made in Washington or Paris are immediate and often devastating. To move beyond this inherited instability, India must redefine these historically neglected industries as foundations for a more resilient and secure economy. Until India breaks free from the legacies of its colonial economy, global politics will continue to write the fate of its most vulnerable.
Featured/Headline Image Caption and Citation: Diamonds, Image sourced from Flickr | CC License, no changes made