If the current market trend is anything to go by, a KPMG study for Gems and Jewellery Export Promotion Council (GJEPC) predicting the global market for diamonds would keep growing and gems and jewellery exports from India will touch $28.28 billion in 2015, may very well be proven wrong.

Pankaj Parekh, Gems & Jewellery Export Council (eastern region) chairman and one of India?s leading diamond processor, told FE that most parts in Gujarat has stopped processing diamonds as the worldwide demand for diamonds has nose-dived.

Diamond prices have come down by an average of 20% globally and the biggest fall in prices is seen in the US, eastern Europe and CIS countries where prices have come down by more than 25%, informed Parekh.

While the US demand has been falling since 2007, the CIS countries and West Asia was still driving the demand for Indian diamonds and now that demand is also slowing down.

Diamond processors and traders in India are in a fix with Gujarat chief minister Narendra Modi not allowing the closure of diamond processing units even as the industry registered 8% negative growth till December 2008.

?For India there are no reasons to process diamonds and it?s only logical to shut down most of the units until the market picks up. But due to pressure from the Gujarat government we are unable to shut down our units,? Parekh said.

He added since November India has stopped importing diamonds, which is worth an average of $1 billion per month and the stocks of cut and polished diamonds are adding to the processors? inventory cost. Diamond exports, in the third quarter of the current fiscal, dipped 20.18% as against the corresponding period last fiscal.

India is home to a bustling $30-billion diamond processing industry, a big chunk of which is based in Surat. An estimated 1,000,000 workers cut and polish about 57% of world?s total rough diamond in the city, helping establish the Indian gems and jewellery sector as the second largest foreign exchange earner after the engineering sector.

While the country?s gems and jewellery exports stood at $20.88 billion in 2007-08 indicating 22.7% growth over the previous year?s $17.08 billion worth exports. ?It is beyond the export promotion council?s estimate where the negative growth will finally lead,? added Parekh.