In the US luxurious products like diamonds have taken a back seat due to increasing energy prices and higher interest rates. This has affected Indian diamond industry in an obvious way; India’s cut and polished diamond exports for June 2006 dropped 22% as compared to the same period previous year.%%Moreover, prices of raw material have gone up by 10% in the past 6 months. Payments have also been delayed that has resulted in liquidity crisis. Presently the market is very weak which has eventually affected the exports. US is the biggest consumer of Indian precious sector, hence a drop in demand there has affected the industry greatly.%%In the current sluggish market jewellery exports have been a ray of hope, jewellery exports have risen by 34% in April- June quarter as compared to the quarter previous year.%%However, industry cannot grow at the rate of 25% year, stabilization is certain. The traders are hopeful that the prevailing slowdown would not sustain for long and the coming festive season will boost the tired spirits.