Surging gold prices have spurred demand for diamond in India with buyers expecting high returns, a top official of the Gemological Institute of America (GIA) said on Thursday.

Diamonds offer higher returns in terms of investment compared to gold contrary to general perception, GIA (India and Middle East) Managing Director Nirupa Pandya Bhatt told reporters on the sidelines of a function.

"Based on reports we get from retailers, the size of the diamond industry in the country is about $1.5 billion. It is well poised to grow in the future", she said.

Gold prices this festive season have zoomed past the Rs-17,000 mark per ten gram, which buyers hope would be reflected in the diamond market as well in terms of returns.

Bhatt said economic meltdown has not impacted sale of diamonds in India.

"I think there was no impact of it (meltdown). I should say the purchase of diamond from customers has been going on as usual," she said.

The Gemological Institute, headquartered in America, is involved in diamond grading and has six laboratories across the globe, including their second biggest in Mumbai, she said.