Reeling under 'self-made' liquidity crisis and falling prices of polished gems, diamond industry in Surat is now hoping that the upcoming Hong Kong Jewellery and Gem Fair will help them script a turnaround story.

The fair to be held from September 19 to September 23 is world's biggest gems and jewellery event with over 3,300 exhibitors from about 46 countries in the world and over 50,000 buyers from more than 135 countries. The fair's September schedule makes it ideal for jewellers replenishing stocks for peak shopping seasons such as Christmas, New Year and Valentine's Day.

For the first time in six months, there is a sense of optimism among diamantaires that the jewellery show may boost their industry and that there are indications that the 'green shoots' of recovery are emerging.

"The success of HK jewellery show will decide the fate of the Indian diamond industry for the rest of 2012," said Sanjay Kothari, vice-chairman, Gems and Jewellery Export Promotion Council (GJEPC). "The market is recovering and we hope the upcoming Christmas festival to remain successful," he added.

Nevertheless, with just few days to go for Hong Kong show, the diamond jewellery consumer market in Asia, the biggest market after US, is seeing signs of recovery with the prices of polished diamond moving up following the inquiries from the buyers.

Vijay Sheth, chairman of Carbon Craft, a Hong Kong-based diamond firm told TOI, "The Asian market is in a recovery mode ahead of the event. The buyer inquiries have increased over the past one week and we hope the show will further spur demand for polished diamonds and jewellery in Asia."

It was first time since the global economic downturn in 2008, the export of polished diamonds decreased by a staggering 42 per cent at $4.8 billion in the last four months since April-2012 compared to $8.3 billion during the same period in the previous year in 2011.

Industry sources said the dealers and jewellery companies in US, China, Belgium and UAE are grappling with rising diamond inventories and falling prices, as the slack global economy prolongs a year-long slump. It is estimated that about $20-$25 billion worth of polished diamonds are in the diamond inventories.