The GIA Insider published an article noting that although the demand for diamonds of two carats and above is going strong, manufacturers from India – the world`s largest manufacturing center — may soon have to face a decline in demand.

The article noted that US and European retailers have reduced orders, and excess inventories reportedly range between $900 million to over one billion dollars. The GIA Insider reports that inventories have also amassed in Antwerp, Hong Kong and New York.

The article quotes a major Mumbai dealer who noted that while the domestic market in India and Asian markets are holding their own, this cannot offset the sluggish demand in the US.

A Surat-based manufacturer was quoted as saying that prices for stones weighing less than a carat are 15-20% too high and profitability will return only following a serious readjustment. The article claims that the problem was partially caused by sightholders who upped rough prices in order to show large manufacturing increases.

The Indian market also fears for the uncertainty of the Argyle mine. The majority of the latter`s 20 million carat annual production reaches India for polishing. The unanticipated high costs which stemmed from Argyle`s transition into an underground operation have triggered speculation that Rio Tinto, the mine`s owner, will sell the operation. So far, Rio Tinto has refused to comment.

India fears that the mine`s closure would cause serious damage to the industry and set off massive layoffs.