Jewellery investors in India are turning their focus on diamonds, shying away from gold as prices of the safe haven yellow metal continue to outrule the rupee.

In India, gold has risen from Rs. 22,000 per 10 grammes in June 2011 to Rs. 30,000 at present, the Hindustan Times reported.

Aside from prices, fashion and lifestyle also played a pivotal role in the ascent of diamonds as a preferred jewellery statement of choice.

"The high gold price is not the only driving force for this gradual shift from gold to diamond," Bachhraj Bamalwa, chairman of the All India Gems and Jewellery Trade Federation, was quoted as saying.

"The young generation prefers diamond jewellery, which is not only lighter but also a fusion of Indian and western designs, vis-à-vis bulky gold jewellery."

India's market is the third largest consumer of diamonds, standing for 8 per cent of the total global demand, almost about the same to Japan and just behind China.

But India's appetite for diamond jewellery has grown significantly over the past few years.

"Indian demand for diamonds is expected to grow more than the demand for gold in the next five years, at about 20 per cent," Nirupa Bhatt, managing director of the Gemological Institute of America, said in the Hindustan Times.

"India's jewellery sector is predicted to grow by 30 per cent by 2015," Rajiv Jain, chairman of Gems and Jewellery Export Promotion Council (GJEPC), said.

"Given that 90 per cent of diamonds are cut and polished in India, taxes incurred on the purchase of diamonds is significantly lower, making it a more viable investment option. In comparison gold is linked to higher import duties, making it a more expensive investment."

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