The economic downturn in the world's jewellery markets has checked the growth of India's diamond export industry, cutting the workforce by as much as 25 per cent and forcing one of the country's most promising export sectors to seek government help.

India has a 55 per cent market share of the world's diamond cutting and polishing business. The industry imports more than half of its rough diamonds from Belgium and has strong links with De Beers, the global diamond group, Alrosa, the Russian diamond producer, and BHP Billiton, the resources group. The bulk of the diamonds, once cut, are then exported again to big markets such as the US, the United Arab Emirates and Hong Kong.

Vasant Mehta, the chairman of India's Gem and Jewellery Export Promotion Council, said yesterday the diamond cutting and polishing industry had lost as many as 200,000 jobs out of a total workforce of about 800,000 people over the past six months in a sector highly exposed to US and Gulf consumers.