A new story appears to be playing out in India with regard to diamond consumption. Demand for the precious stones set in jewellery surged 31% in India in 2010, as compared to diamond jewellery demand in China which grew by just 25%.

Currently, India accounts for 10% to 11% of global consumption. India's fetish for diamond jewellery has grown faster than that of China, according to Diamond Trading Company (DTC) CEO Varda Shine.

The DTC CEO who was in Mumbai at the start of the week said that De Beers and the DTC were pretty bullish on India. She noted that diamantaires in India have the most sophisticated, innovative and successful business sense and practices.

``If one looks into the competitive business process of selecting sightholders for DTC, I have no doubts that most of them will be Indians this year,'' she said. As demand outstrips supply, the CEO noted that the long-term outlook for diamond prices is set to rise.

The new sightholder list is to be announced by the end of 2011, for the period between April 2012 to March 2015, but the DTC CEO avers that India stands to get a large share of DTC's roughs pie.

Though the Indian consumer is content with smaller stones as compared to the Chinese consumer, demand is set to rise further this year, she added.

Growth in demand from India is based on the consumption of small diamonds in large volumes, around 80% of the carats consumed in India are small diamonds. In comparison, 80% of the carats consumed in China are of 0.5 carat and larger.

After India and China, the US market continues to account for 38% of global diamond demand. Shine noted that the US market is expected to grow in high single digits this year.

India is the largest diamond cutting centre and largest customer of rough diamonds, responsible for around 72% per cent of the worldwide consumption.

China and Israel corner only 11% and 7% of global rough consumption, respectively.

And, as diamond miners continue to struggle to keep pace with the growing demand from India and China, prices of roughs have reportedly risen as much as 91% from a six-year low in early 2009.

However, Shine expects a slowdown in India this year, starting now. Growth is expected to slip to 20% in 2011, as against 31% in 2010.

``We expect a slight slowdown in the ongoing current second quarter, but hope the industry in India will continue to grow,'' Shine said.



DTC's four-member delegation, led by Shine, was also scheduled to review its sightholders in India. DTC sells around 40% of the world's rough diamonds by value and has around 35 sightholders in India, of which 18 are based in Surat alone.

However, Rajeev Jain, chairman of the Gems and Jewellery Export Promotion Council was not worried. ``The US is still the single largest diamond jewellery consumer market. India and China would together cross the US demand by 2015,'' he said.

Incidentally, miner and luxury jewellery retailer Harry Winston Diamond Corporation said that prices for polished diamonds have risen 9.5% this year and are expected to firm up further as producers struggle to meet Chinese and Indian demand.

An official reportedly said that earlier the diamond in Indian culture was not fully recognised except for the highest-ranking individuals, but the appreciation of the gems has now penetrated the middle class, which will push demand even higher.