TRADE between India and Hongkong increased considerably last year. Hongkong's exports recovered from a temporary setback in 1991, when exports to India slumped by 21 per cent, and by the end of October 1992, Hongkong's total exports had grown by 33 per cent. Although India's exports grew by only five per cent during the same period, this produced an increase in total trade of 12 per cent, and was on course for a year-end trade balance of $3.5 billion in India's favour. Nearly two-thirds of all Hongkong's imports from India are precious stones - mainly diamonds - for Hongkong's jewellery manufacturers, or for re-export to Japan. ''Our precious stone industry has expanded,'' said Mr Deepak Ray, Acting Commissioner at the Commission for India. Hongkong also imports substantial amounts of fish - the value of which showed a 49 per cent increase during the first 10 months of 1992. Last year, India's exports of clothing, mainly cotton-knit garments and some high fashion items, were seven times greater than in 1991 - an increase which Mr Ray attributed to India's gradual policy of developing new markets. Mr Ray said the base of India's textile and leather industries had increased and the technology had also been improved. Hongkong has played a part in this technology improvement. Exports and re-exports of equipment and machinery form a significant portion of the territory's trade with India. Re-exports of textile and leather machinery doubled in 1992. This increase in trade has been helped by a reduction in tariffs on capital goods, from over 100 per cent to 40 per cent. Hongkong's exports to India include textiles, fabrics, watches and clocks, and computer parts. Re-exports, many of which originate in China, include pharmaceuticals, telecommunications equipment, silk and a variety of chemicals. Part of India's trade promotion includes participation at trade fairs. Indian companies are already familiar participants at some of Hongkong's major events, such as the International Leather Fair, Interstoff Asia, the Hongkong Trade Development Council's (TDC's) Hongkong Fashion Week and the Jewellery Show. Because India has also developed an information technology (IT) industry, Mr Ray was also keen that firms should participate in Cenit Asia '93. Financial sponsorship will be provided for these trade fairs by the Indian Trade Promotion Organisation, and the Manufacturers Association of IT will be giving its support to Indian companies at Cenit. Mr Ray is also kept busy by the steady flow to Hongkong of India trade delegations, sponsored by export promotion councils and chambers of commerce. Looking to the future, Mr Ray said he would like to see an increase in Indian exports of electronic components and software - fields in which India had developed a considerable expertise. He also hoped to expand exports of machinery and raw materials to China, especially in the construction industry, which had a great need for such items. ''There is a possibility to increase two-way trade,'' he said. ''The Indian Chamber of Commerce is also actively involved in trade. We work closely with the TDC. ''Hongkong is putting a special emphasis on trade with India.'' he said.