Following weak demand from the overseas market, including the US, China, Europe and Japan, the polished diamond export from India has plunged to its lowest at 37 per cent in December 2012. Industry sources said the annual polished diamond export is set to decrease by $2 billion to $3 billion in 2012-13.

As per the statistics published by the Gems and Jewellery Export Promotion Council ( GJEPC), the export of polished diamonds in December 2012 plunged 36.74 per cent at $949 million compared to the same month in the previous year. However, the total export of polished diamond from April-December 2012 plunged 36 per cent at $11 billion compared to $17 billion during the same period in 2011-12.

In 2011-12, India's polished diamond export decreased by 17.32 per cent at $23 billion compared to $28 billion worth of diamond export in 2010-11.

Industry sources said weak demand from overseas markets, especially US, Europe, China and Japan is the key reason behind the decrease in the polished diamond export. Central government's 2 per cent import duty on polished diamond has also created a lot of impact on the export of polished diamonds.

The government's move was aimed at curbing the widespread practice of round-tripping - whereby companies seek to boost turnover by frequent import and export of the same diamonds in order to get additional bank financing. The introduction of the import tax has helped curb round-tripping.

"This time around the total export of polished diamond is likely to decrease from $23 billion to below $20 billion in 2012-13," said a DTC sightholder.