Imports of rough diamonds seen jumping 25 percent in FY14

By Siddesh Mayenkar

MUMBAI (Reuters) - India's imports of rough diamonds are likely to jump by a quarter in the next fiscal year from $14.5 billion now, as exports of the processed gems to top consumers increase and Indian exporters enter newer markets.

India, the world's largest processor of rough diamonds, gets most of its supply from firms such as top producer De Beers , mining giant Rio Tinto , and Russian state-owned Alrosa. It is looking to boost exports and cut imports to rein in a ballooning current account deficit.

"We will go to newer markets to beat the slowdown, for example, the countries of the former Soviet Union are buying in huge quantities from India," said Pankaj Kumar Parekh, vice chairman of the Gems and Jewellery Export Promotion Council, which represents more than 5,500 of the country's exporters.

The trade body expects India's exports of cut and polished diamonds in the fiscal year to March 2014 to be 25 percent higher than current estimates of $16 billion, equivalent to 66 percent of total gems and jewellery exports.

It expects exports of gems and jewellery to rise 6.6 percent to $50 billion. Exports of gems and jewellery - which include diamonds - constitute 14 percent of India's total trade, and employ 3.4 million workers, with the Middle East taking most of India's gems and jewellery shipments.

Demand from the euro zone could be depressed because of the region's debt crisis, though he bet on a revival in demand from the United States.

"Things are in the doldrums in the European Union, and the buoyancy is visible in India and China," said Parekh.

India processes about 92 percent of the world's diamonds, followed by Belgium, Israel and China. Most of the diamonds are sourced from world miners through Dubai.

World diamond production has been steady at 120 million to 130 million carats or roughly about $15 billion in value terms, putting an upward pressure on prices, the Council said. Miners are unlikely to ramp up production without a massive improvement in the world economy, it added.

ROBUST SILVER

Exports of silver jewellery are likely to grow at a robust pace next year, as growing numbers of buyers opt for the cheaper metal in the facing of rising gold prices.

"Middle class consumers are finding gold expensive, and the metal is being replaced by silver," said council official Sabyasachi Ray.

A 10-gram quantity of silver is valued at 547.8 rupees, against 29,766 rupees for a similar quantity of gold.

Exports of silver jewellery rose to $715 million in the 11 months to February, an annual increase of 10 percent, compared with flat exports of $18.12 billion of gold jewellery, data from the trade body showed. (Editing by Clarence Fernandez)