According to the Economic Times, the domestic consumption of diamonds in India has doubled over the last three months, from 2% to 4% of the total production. Diamonds are currently emerging as an investment alternative for gold.



The Economic Times quotes Praveen Nanavati, past president of the Surat Diamond Association, as saying: "Recession has sent the message across to those who were looking for the right opportunity to invest in polished diamonds. Over the last three months alone, the domestic demand for polished diamond has gone up from 2% to 4%, and this is increasing."



The Rs 80,000-crore Indian diamond industry processes 90% of world's polished diamonds.



Responding to the latest developments, Mehul Choksi, chairman of FICCI’s gem & jewelry committee, stated: "People are switching over from gold to diamond. While the price of rough diamonds has gone up significantly, that of polished diamonds is going up slowly after touching a new low due to recession. This has created a good opportunity for people to invest in the precious stone."



The Gem and Jewelry Export Promotion Council (GJEPC) claims that the demand for diamond-studded jewelry in India has also increased significantly over the last year. Domestic demand for diamond jewelry has reportedly risen by 25% in the last three years.



Vasant Mehta, chairman of Gem & Jewelry Export Promotion Council (GJEPC) stated: "During the last few months, the industry has witnessed good demand from consumers for expensive diamonds bigger than 1 carat. When diamonds were available at 15% lesser cost, investors found it to be a new investment option."



Neelesh Hundekari, of the consulting house, AT Kearney advises caution: "There is a huge potential for investment in diamonds. But while investing, one needs to be aware of the quality certificate to ascertain the purity of the stone. Also, purchasing diamonds at retail level is different from stock purchases, and the price is not always transparent. So, one should be in the know of the price at which the diamonds are being offered.”