The sector last year outperformed all other cutting centres in the world.Gem & Jewellery Export Promotion Council's former chairman, who is also the managing director of Shrenuj & Company, Shreyash Doshi, speaks to The Financial Express on the current and future trends of this fledging industry. Excerpts:

On the industry's performance in first half
The diamond export business has been quite encouraging during the first half of the current year. Dispatches were up by nearly 22 per cent at $2,891 million compared with $2,364 million in the same period of the earlier year.

On the surge in shipments
Not only the US demand has continued to be strong but even Europe is now buying more than before, with its economic growth rate expected to go up by two per cent against 1.8 per centearlier. Demand from Japan is also showing signs of improvement.

About supply and prices of roughs
Earlier there was considerable shortage of roughs but the supply is now better than before though in the open market certain qualities were not yet available in adequate quantities. De Beer's policy is now far more positive. It has become friendlier to investors and clients. There is likely to be some switch in business from the cheaper to better quality goods.

Prices for cheaper roughs have risen considerably over the past 10 months. Values of polished stones have also improved consequently. Even yellow and brown diamonds whose prices in the past nosedived have improved. On a rough estimate, prices of browns may have improved by about 15-20 per cent in the last nine months or so.

On Shrenuj's own performance
There has been an impressive improvement in our performance during the the first six months of the current year. Turnover rose more than 55 per cent to nearly Rs 84.80 crore fromRs 54.58 crore in the same period of the earlier year. Net profits improved by nearly 25 per cent at Rs 3.11 crore from Rs 2.49 crore. Its subsidiary Moon Diamonds has also done well. The company hopes to push up its total sales this year to Rs 200 crore.

On fears of saturation in diamond exports
Fears that diamond exports are reaching a saturation point are unfounded. There are no reasons why India cannot expand its annual diamond exports to say, $8 billion, provided appropriate steps are taken to achieve such a target.

On steps needed to push up exports
The government should do away with the present system of licensing which hampers shipments and breeds corruption. Import duty on gold should, moreover, be brought down drastically. In view of the present licensing system, exporters have to face various hurdles at different stages. If this system is altogether done away with and import duty on gold is brought down, diamond exports from India can rise smartly.

The banking sector alsoshould be a little more helpful than at present. Commercial banks lending to this sector is about Rs 6000 crore at present, their exposure should increase by at least Rs 8,000 crore, if diamond exports rise significantly.

On the domestic market for studded jewellery
The domestic market for diamond studded jewellery is expanding, but it is difficult to estimate the present size of this market.

On the proposal to convert SEEPZ to a free trade zone
This proposal appears to be shelved. Actually there is need to allow freely both imports and exports of roughs. If this is done, India can become the world diamond trading center just like Belgium. Overseas suppliers are not inclined now to bring their roughs here for sale because of difficulties in taking back unsold stones. What is needed is some imaginative and bold decisions. At present international suppliers of roughs prefer to have their distribution offices abroad and not in India because of the present restrictions on the movement ofgoods into and out of the country.