India's Lab-Grown Diamonds Have Just Got Shinier

At the time Biden demitted office, the US State Department said it was the most expensive gift given by any world leader to Biden family in 2023. 

What most people missed among all the hoopla was that it was a synthetic, lab-grown diamond (LGD), which, according to Time magazine, is at the heart of India’s bid to become a global leader in producing a “conflict free” diamond alternative that has a much smaller carbon footprint than mined diamonds.

India’s Flex

India's LGD industry is experiencing robust growth. Between April and June 2023, exports of LGDs surged to Rs 1,918.63 crore, up from Rs 295.23 crore in the same period the previous year, with the US, UK and Australia key export markets. 

The Gem and Jewellery Export Promotion Council (GJEPC) reported that Indian manufacturers produced 4.04 million carats of LGDs between April and October 2023, a 42 per cent year-on-year increase. In contrast, natural diamond production declined by over 25 per cent during the same period. 

The LGD market in India is projected to continue its upward trajectory, even as the global market for LGDs, which was valued at US$ 22 billion in 2021, is expected to reach US$ 56 billion by 2031, growing at a CAGR of 10 per cent. 

Several factors are driving this surge, including the lure of diamonds at a fraction of the earlier cost; besides ethical and environmental considerations among the younger, more conscious consumers; and India's expertise in diamond cutting and polishing that makes production more cost-effective.

Government support, including potential inclusion in production-linked incentive (PLI) schemes and grants for research and development, also aims to foster growth.

Rajiv Babbar, a Delhi-based diamantaire, said, "We find most clients prefer LGDs over real diamonds. My business has accordingly shifted. The reason is simple — a 1-carat real diamond is worth about Rs 2-2.5 lakh while a 4-carat lab-grown one is worth the same amount of money."

Most Indian diamond merchants still prefer imported LGDs, although the Indian LGD industry is growing rapidly. The government has taken steps to reduce customs duty on seeds which develop into lab-grown diamonds. "This has helped lower production costs. We expect more reduction or elimination of import duties on other raw materials as our industry flourishes," said Babbar. 

Top Commerce Ministry officials told The Telegraph that IIT Madras is setting up an India Centre for Lab-grown Diamonds in Chennai at a cost of about Rs 250 crore. "This should help spur our research in this area and also help bring in technologies which could give us an edge in the market," said officials.

How Diamonds Are Grown In Labs

In nature, diamonds are created when carbon deposits deep underground are subjected to extreme pressure and heat over billions of years. Lab-grown diamonds, made of pure carbon that is crystallised into an isotropic form, have the same chemical properties as natural diamonds. But the process is infinitely faster.

There are two ways to create LGDs. The first way, called chemical vapour deposition (CVD), uses a small, natural diamond as seed in a sealed chamber and exposes it to carbon-rich gas at extremely high temperatures. Over a few weeks, the carbon gas ionises and begins sticking to the seed diamond, which grows in size to create a new diamond. 

In the second way, called the high-pressure high temperature method (HPHT) — which mimics the creation of diamonds from carbon deposits in nature — pure carbon is pressed through a metal cube while being exposed to high electrical heat. 

While this method doesn’t require a natural seed diamond, as it uses universally available carbon, it requires more and costlier infrastructure, and takes longer for LGDs to reach a desired size.

Jewellery experts opine that LGDs are indistinguishable from natural diamonds. The only difference is that the really large natural “stones” are difficult to create in the lab, as the time taken to produce one via either CVD or HPHT is prohibitive. 

That’s why so far, LGDs are more popular in the fast-fashion industry, and are yet to dent the market for high-value, exclusive jewellery. Nevertheless, LGDs have already made a big dent in the global diamond industry.

Domestic Demand

Gujarat being the centre of the global diamond cutting and polishing industry — India handles 90 per cent of the world’s cutting and polishing — small diamonds are easily available, making CVD the process of choice for India’s growing LGD industry.

Over the past five years, India has toppled China as the largest manufacturer of LGDs globally. But the real breakthrough has happened within the country. Over the past few festive seasons like Dhanteras and Diwali, as well as wedding seasons, during which time, Indians tend to buy jewellery, LGD jewellery sales have doubled and knocked off natural diamonds as the stone of choice in these shores.

And the reason is not difficult to fathom. While a 1-carat natural diamond ring can cost upwards of Rs 5 lakh, an LGD ring of the same carat weight is not only less than half, but also fell from around Rs 2 lakh in 2023 to Rs 80,000-Rs 1 lakh in 2024. To convince buyers, jewellers are even offering attractive buy-back offers on the LGDs they sell.

Recognising this potential, major global brands like Swarovski have now swooped into India’s LGD sector. Large domestic jewellery brands like Tata's Zoya and Senco have also begun to make their presence felt.

Barring the uncertainty over US exports over the tariff issue, the future of India's diamond industry looks bright.