Diamantaires in Surat, Asia's largest diamond polishing hub, are unperturbed by the slowdown in demand from the United States and Europe, given the diversification of their market portfolio. Exports to Asian countries and the Middle East have helped buoy the drop in sales.

Though the US and Europe still account for a sizeable quantity of diamond exports from the country, Asian markets like Hong Kong accounted for the highest export of cut and polished diamonds from India between January and August 2011, at $5,957 million, according to the Gems and Jewellery Export Promotion Council.

Thailand followed with exports worth $355.85 million, Japan with $173.41 million, Singapore with $151.03 million, the Republic of Korea with $36 million, Malaysia with $23.64 million and Nepal with $1 million worth of polished diamonds.

In the same period, exports of cut and polished diamonds to the US stood at $2,330.28 million, and key market Belgium in Europe had exports worth $1,532.48 million.

"This is a complete turnaround from two years ago, when Indian exporters were completely dependent on the US and Europe to take their business forward,'' said Surat Diamond Association president Dinesh Navadia.

The UAE was another top export destination for Surat's diamond merchants with exports pegged at $7,789.25 million. Last fiscal, the UAE emerged as the largest importer of Indian diamonds, accounting for a 47% share, followed by Hong Kong with 22% and the USA with 11%, according to the Council.

Moreover, in August 2011, India's gem and jewellery industry saw its polished diamond exports rising 3% to $2.373 billion on a year on year basis. Imports of polished diamonds jumped 14% to $1.571 billion, but the country's net polished exports, dropped 15% to $802 million.

"One has to understand that it was just a month after the Mumbai bomb blast in July 2011. The drop in sales should be seen against that scenario,'' said Navadia.

Rough diamond imports increased 20% to $830 million, while rough diamond exports jumped 57% to $141 million, data from the Council showed.

The economic slowdown in the US and the rising value of the Indian rupee have been cited as reasons for the decline in exports from the main regions. Two years ago, the diamond industry in Gujarat, which polishes over 93% of the world's diamonds, was in severe trouble due to the drastic fall in export orders from the US and Europe.

In July, India's polished diamond exports were up 14%, while in April, polished diamond exports rose 5.53%. In March 2011, exports rose a huge 59%, while in February, polished diamond exports rose 23%, according to the Council.