Thai gem and jewellery shipments may grow by up to 3% this year, an improvement from a 5% contraction in an earlier forecast thanks to the economic recovery in the US and Japan and the weaker baht.
Somchai Phornchindarak, president of the Thai Gem and Jewelry Traders Association, said relatively stable gold prices will also help Thai exporters.
Shipments are projected to increase by US$260-390 million from $13 billion last year, he said.
The Internal Trade Promotion Department is more optimistic, forecasting that exports will rise by 5% to $13.7 billion by year-end.
For the first five months of this year, Thailand shipped $3.33 billion worth of gems and jewellery, down by 27% year-on-year.
Mr Somchai said another positive factor for the industry is the government's new incentive for buyers.
Prime Minister Yingluck Shinawatra early this month approved a tax waiver for traders at the Bangkok Gems & Jewelry Fair, to be held at Impact Muang Thong Thani from Sept 6-10, with a 30-day grace period.
Thailand normally charges a 20% import tariff on such products.
Hong Kong, Malaysia and Singapore have already cut their tariffs to zero, while China and India have reduced theirs to 7%.
To develop the local industry, the government may upgrade Chanthaburi town to a "City of Gems" and turn the eastern province into a preferential trade zone for gems and jewellery, with links to global high-quality raw materials suppliers such as Mozambique, Tanzania and Madagascar.
Srirat Rastapana, director-general of the International Trade Promotion Department, said the plan was based on the private sector's proposal.
The government can provide support in infrastructure development, promotional privileges and tax waivers, she said.
Mozambique is now Thailand's largest provider of raw materials for gems and jewellery, followed by Madagascar, Sri Lanka and India.
The Thai government in February signed a memorandum of understanding on mineral resource cooperation with Mozambique to ease manufacturers' shortage of raw materials.
The cooperation covers exploration, investment promotion and academic exchanges with the aim of expanding trade and investment for the gems and jewellery industry.
Thailand is in short of raw materials for the sector, while Mozambique wants knowledge on certification, cutting and value addition.
Thailand imports 30 billion baht worth of raw materials for the sector each year. Including gold, the value reached 406 billion baht last year.
Thai exports to Mozambique were worth $163 million in 2012, mainly rice, plastic pellets, auto parts, steel and sugar.