He said India was the largest buyer of rough diamonds and "there must be an assured supply of diamonds for the industry to grow and there is a need for Indian investors to invest in foreign mines".

"A committee is being formed to consider permitting such investments in diamond mines abroad," he said at an International Diamonds Conference in Mumbai on Tuesday.

"Given the fact that India is the largest buyer of diamonds, our voice must be more seriously heard and our concerns more carefully addressed," Nath said.

He said the government would encourage foreign direct investment and joint venture in exploration, mining, cutting, polishing and designing of diamonds. For this, the government is also considering economic cooperation agreements with diamond supplier countries, especially in Africa, he added.

Nath stressed the need for establishing forward and backward linkages for Indian diamond industry in order to cement its position in the international market.

He said the government was also considering setting up an international trading centre for diamonds by the end of this year.

The commerce minister said India has set a target of $92 billion in merchandise export for 2005-06, up from $80 billion in 2004-05.

Nath later told reporters that India was considering imposition of a 15 percent countervailing duty on dumping of goods from the United States but before that "we have to see what steps the US is taking on the issue of anti-dumping".