Revival hopes of the diamond industry have been dashed as gems and jewellery manufacturers feel that little help has been provided to them in the Interim Budget for 2009-10.

The Rs 50,000- crore (Rs 500 billion) Surat diamond industry, which has been one of the hardest hit by the financial meltdown, is likely to see more layoffs in times to come, according to leading industry players. So far, 150,000 diamond workers have lost their jobs.

"With the ongoing financial turmoil hitting the industry hard, the stakeholders of the industry were expecting a relief or a bailout package. This has not happened in the Budget," said Pravin Nanavati, former president of the Surat Diamond Association.

The diamond industry was looking for a special relief package from the Interim Budget after AICC General Secretary Rahul Gandhi last week visited Surat's jobless diamond workers and emphasising better support to the sector.

Also, the Reserve Bank of India [Get Quote] (RBI) met in Ahmedabad last week and decided to constitute a task force to look into the problems being faced by the diamond industry in Gujarat. It also made recommendations to mitigate the difficulties.

The Interim Budget has extended the interest rate subvention of 2 per cent on pre- and post-shipment credit for certain employment-oriented sectors, including gems and jewellery, beyond March 31, 2009, till September 30, 2009, involving an additional outgo of Rs 500 crore (Rs 5 billion).

"As far as the extension of the interest subvention on pre- and post-shipment credit is concerned, it will be beneficial for only those deals that have been executed so far. It may not turn out to be helpful to new businesses as no fresh deals are being carried out currently due to the ongoing recession," Nanavati said.

"The government has extended the benefit of 2 per cent interest subvention till September 30, 2009, but considering the present situation, it will have to extend it further," said Chandrakant Sanghvi, regional convener for Gujarat, Gems and Jewellery Export Promotion Council.