Diamonds are Gujarat's best friend. The cut and polished diamond (CPD) industry in the State, which manufactures 95 per cent of the diamonds exported by the Indian gems and jewellery industry, will be worth $32 billion, or 1.41 lakh crore by 2012.

Thanks to the ever increasing demand for diamond studded jewellery in US, China, UAE and India and the increase in the valuation of the polished diamonds due to rising prices of rough stones, the diamond industry in the state registered 60 per cent growth by processing polished diamonds worth $26 billion in 2010-'11 compared to $16 billion in 2009-'10.

Interestingly, in just two years time the diamond industry in the state is set to achieve 100 per cent growth by processing diamonds worth $32 billion in 2011-2012 compared to $16 billion in 2009-'10.

Surat is the biggest manufacturing centre in the state, processing about 85 per cent of the cut and polished diamonds. Other centres like Ahmedabad, Navsari, Rajkot, Bhavnagar, Amreli, etc. contribute 10 per cent - a small portion of the cutting and polishing is done in Mumbai.

Industry experts believe the valuation of the rough and polished diamonds is a major factor behind increase in the export coupled with the increasing demand from the key consuming markets in the world. As the trend is likely to continue for the coming months, the diamond manufacturing sector is likely to witness 25 per cent growth in the current year.

"There is a phenomenal growth in the state's diamond sector after the global recession in 2008. The manufacturing capacity has gone up significantly in the last one and a half year," said Chandrakant Sanghavi, regional director of Gems and Jewellery Export Promotion Council (GJEPC).

Sanghavi said the valuation of rough diamonds has appreciated by almost 30 per cent since January-2011, which in turn has appreciated by the prices of polished diamonds by almost 15 per cent. As recovery of rough diamonds from the world mines is stagnant, the prices are likely to go up in the coming months, which is again going to increase the prices of polished diamonds.

Increased manufacturing capacity in Surat and other diamond manufacturing centres will benefit the 8 lakh strong diamond workforce in the State.

In the last one and a half year, the wages of the diamond workers in Surat - there are about 5 lakh workers in the city - have appreciated by almost 20 per cent. In the current year, the wages is likely to appreciate by another 10-15 per cent as the demand for polished diamonds is increasing. Dinesh Navadia, president of Surat Diamond Association (SDA) said, "The diamond workers are paid on piece meal basis. Thus, more work means more money for the workers. Most of the diamond manufacturers have started offering incentive schemes to their workers and this time around the Diwali bonus is likely to increase."