Increase in gold and energy prices has taken the sheen off diamond trade in fiscal 2006-07.

According to Gem & Jewellery Export Promotion Council (GJEPC), a dip in demand in the US market has also hit exports of cut and polished diamonds from India.

The exports have shown a fall of 6% during the first 11 months of fiscal 2006-07.

However, the total exports, including diamond-studded gold jewellery and coloured gem stones, grew by over 5%. According to traders, inquiries have also gone down.

According to a market analyst, though the net exports are marginally high, the scenario is not rosy because one has to take into account the increase in gold prices, which has pushed the export value up.

According to GJEPC sources, demand from the US market, which consumes around 50% of the total jewellery, is not encouraging.

Hit by this trend, GJEPC is now focusing on CIS countries and Japan. The traders' body also believes that the situation may continue for some time.

The countries diamond headquarters Surat is also facing the heat. Traders have already started diversifying into other businesses now.

The export of cut and polished diamonds for April-February (07) stood at Rs 43,828.22 crore (Rs 438.28 billion) as compared to Rs 46,663.56 crore (Rs 466.63 billion) for the corresponding period previous year, registering a decline of 6.08%.

The total exports of gold jewellery grew to Rs 21,349.94 crore (Rs 213.49 billion) for the period from Rs 15,125.41 crore (Rs 151.25 billion) of the corresponding period last year, marking an increase of 41.15%.