This year's Diwali festival in the country and Christmas holiday sales in the US are not going to reassure the diamond manufacturers and exporters in the $43 billion worth of Indian gems and jewellery industry.

The US elections, hurricane Sandy, China's leadership transition, volatile Rupee and high gold prices have brought in additional uncertainty in the markets. Hence, the prices of certified polished diamonds have declined by almost 2 per cent in the first week of November.

Rapnet, world's largest online marketplace for certified diamonds managed by the US-based Rapaport group, stated that during the first 10 months of 2012 the certified polished diamond prices for one carat diamonds fell 12 per cent.

"It is not a good sign for the overall health of the industry. The decline in the polished diamond prices will hurt the market sentiments in the long run. It will also create a negative impact on the non-certified goods categories," a DTC sightholder said.

Industry sources said diamond manufacturers, especially small and medium units, in Surat are finding it difficult to make profit on the purchase price of the rough diamonds. Moreover, a large influx of high-priced De Beers goods has put additional pressure on the rough diamond market.

A small diamond manufacturer in Mahidharpura Naresh Gabani said, "It is very difficult to derive profit from the rough diamonds as the prices are very high. On the other hand, the polished diamond prices have decreased by almost 20 per cent. Thus, we are holding our goods in anticipation of better prices before Christmas sales."

Sources said trading activity has slowed down as hurricane Sandy halted business in New York's diamond market. There is some concern that the storm will impact holiday yluxury sales along the East Coast as consumers focus on necessities during the recovery period yand put holiday gift buying on hold.