NEW DELHI - India's exports of gems and jewelry fell in the last fiscal year, but a recovery is likely this year thanks to gold's recent price plunge, which has sparked interest in export markets, according to Vipul Shah, chairman of the state-backed Gem & Jewellery Export Promotion Council.

India, the world's largest gold consumer and net importer, is also a major contributor to the global trade in gold jewelry. Gold comprises about one-third of the country's gem and jewelry exports, which in turn account for nearly 15% of the value of total exports.

Gem and jewelry exports will likely rise by 12%-13% in the year that began April 1 after the market dipped by 9% last year, to around $39 billion, Mr. Shah told The Wall Street Journal. It was the first decline in a decade.

"The proportion of gold in our jewelry exports will increase" as well, Mr. Shah said.

The global market for jewelry--whether or not it contains gold--was depressed last year and early this year as a result of conservative spending on luxuries in the face of slowing economic growth. Faint signs of an economic recovery and the sharp fall in gold prices have combined to improve appetites, both in India and in its export markets.

India increased its import tax on gold from 2% to 4% last March and then to 6% this year in an effort to curb imports of the precious metal, which were contributing to a widening current account deficit that was exacerbated by spiraling gold prices at the time, partly due to a weakening rupee. A stabilizing rupee--the currency has mostly stayed within a 52-55-rupee band against the U.S. dollar for the past year after weakening from around 45 rupees in August 2011--and lower global prices will help to narrow the current account deficit, as would a pickup in jewelry exports.

There have already been signs of a pickup in gem and jewelry demand from overseas buyers in the U.S. and Japan, Mr. Shah said. India also counts United Arab Emirates, Hong Kong and several European countries as major export destinations.

The Gem & Jewellery Export Promotion Council is also hoping to spur overall sales by targeting new markets, including China and Russia.

The pickup in jewelry exports coupled with the rise in domestic demand will likely provide relief to the manufacturers in the world's largest bullion market, who were earlier facing slower demand as a result of the increased import tax.

International spot gold fell to as low as $1,321.50 per troy ounce on April 16 compared with above $1,550/oz a few days earlier. It has since recovered to around $1,445/oz, but analysts say it isn't likely to rise sharply in the near term.

Sambhav Gems Ltd. Chairman Rajiv Jain said some overseas buyers are waiting for gold to stabilize--and once that happens, over the next month or so, demand will get a further boost.