A surge in consumer demand for diamond studded jewellery in India, China, U.S, Europe, Hong Kong and UAE has added an extra sparkle to Surat's diamond industry. Diamantaires are upbeat as the prices of polished diamonds have increased by a record 18.5 per cent in the past six months compared to same period in the previous year in the global market.

Industry sources said the value of diamonds has been going upwards since the beginning of the year, helped to a great extent by increased demand facing limited supply. Demand has been especially strong for polished diamonds smaller than one carat, as Asian buyers, mainly in India and China, are scooping up stones to meet the needs of surging consumer markets.

"The recent rally in gold and silver prices has forced many new customers to look closely at diamond jewellery," said Kaushik Mehta, chairman of Naqshi Jewellery. "A significant segment of customers find diamond jewellery more affordable and we have noticed an appreciable shift of consumers from yellow metal to diamonds."

According to Mehta, in the local trade the price spikes have not had as much of an impact on consumer preference for diamond jewellery as it did on gold pieces. What is changing is the buyer's recognition that diamond jewellery can represent an investment in itself, and retailers talk about shoppers who have traditionally favoured gold for festivals and occasions such as weddings now turning to diamonds.

The world's biggest diamond cutting and polishing centre in Surat manufactures polished diamonds worth Rs 80,000 crore per annum.

As per IDEX online's research, the polished diamond prices registered a record increase of 5.5 per cent in June compared to the same month in previous year and that the overall increase for the six months stood at 18.5 per cent.

Varda Shine, CEO of Diamond Trading Company (DTC), has stated during her recent visit to Surat that by 2015, China and India are expected to equal or surpass the market share of the US - 35 to 40 per cent of the global diamond jewellery market. Reason: both India and China have exhibited extraordinary growth in diamond jewellery segment at 31 per cent and 25 per cent respectively, in 2010.

Ashit Mehta, chairman of Blue Star, said, "Last year the polished prices were not moving in tandem with the increase in the rough diamond prices. This year, the polished prices are moving upwards due to the increased demand from the emerging market and it is expected to continue for a longer duration."