SURAT: The S&P downgrade of US may not impact the Indian diamond industry as the latest data published by the US department of commerce has boosted the size of US jewellery industry by about 5 per cent, restoring it to its former level of $65 billion in the peak sales year of 2007. This news will may come as a relief to the $43 billion worth of Indian gems and jewellery industry.

As per the official statistics by the Gems and Jewellery Export Promotion Council (GJEPC), India exports about 35 per cent of the polished diamonds and jewellery to the US worth $12 billion per annum. In 2010-11, India exported polished diamonds worth $28 billion and about $9.30 billion were exported to the US.

The global jewellery market is $145 billion in size and 40 per cent of the jewellery is consumed in US, making it one of the biggest jewellery markets of the world followed by Hong Kong, China, India, UAE etc.

Vice-chairman of GJEPC Sanjay Kothari told TOI, "Gems and jewellery is an export-oriented sector and the S&P downgrade of US had worried the diamantaires. But, the latest data of US government would boost the confidence of diamond and jewellery exporters in India." According to the US department of commerce, the latest industry sales database revision in early August has restored the jewellery industry to its former pinnacle of $65 billion, a level reached in 2007. The data also showed that jewellery sales declined by about 11 per cent during the great recession of 2008-2009 with the total jewellery market pegged at $62 billion.

The export of polished diamonds for three months from April-June has increased by 10 per cent at $6.5 billion compared to $5.5 billion during the same period in the previous year. In June 2011, the polished diamond export did not gain much enthusiasm and it was up just one per cent to $2.22 billion compared to same month in the previous year, while in July 2011 the polished diamond export declined by 5 per cent at $1.9 billion compared to $2 billion in same month in previous year.

If the diamantaires are to be believed, then in the post-recession scenario, the US is still the top export destination for the industry, but a part of the demand has been offset by other emerging markets like Middle East, China, Hong Kong, Kazakhstan, Brazil and Russia.

Industry sources said that pre-recession, about 50 per cent of the polished diamonds and jewellery were exported from India to US. However, the global economic downturn in 2008 changed the phenomenon and that the diamantaires started exploring new markets, including India.

Director of Sanghavi Export Aagam Sanghavi told TOI, "The US is no longer the price driver for polished diamonds for Indian manufacturers, which it used to be pre-recession. Post-recession, people have started doing more sensible business and this is the reason why new markets have been explored in the past couple of years to offset the US market."