India's diamond-polishing and fine jewelry-making industry is experiencing a slight relief from the recent economic woes as demand rises from both local and international markets, Business Standard reported.

Over the past two months, demand for rough diamonds has greatly improved, but because diamond miners have significantly slowed production supply of rough diamonds of all sizes have reduced tremendously, creating a supply crunch.

The US market, which was responsible for 90% of India’s diamond and fine jewelry exports, continued to remain a concern for exporters because the it is still in the midst of a deep recession.

However, demand for Jewelry and diamond from the Middle East and China has largely compensated for the drop in demand from the United States market. Demand for jewelry within India has also picked up in the last two months.

India's diamond and fine jewelry industry employs about 650,000 people, and has re-employed about 10% of the work force it had laid off since September last year.