Recognising the high employment potential of the technology-driven industry, the Union Budget FY24 had extended Customs duty relief to LGD seeds.
Prime Minister Narendra Modi gifted a piece of lab-grown diamond (LGD) from Surat to Jill Biden, the first lady of the United States, during his recent State visit to the world’s oldest democracy. That was the sign of arrival of a burgeoning domestic industry, which began commercial-scale production less than a decade ago.
Recognising the high employment potential of the technology-driven industry, the Union Budget FY24 had extended Customs duty relief to LGD seeds. Also, it was announced that indigenous production of LGD seeds and machines would be encouraged with an R&D grant to one of the IITs for five years.
But these are till early days for India’s LGD sector, and it will take giant strides for the country to dent China’s competitive edge in the world markets. Of course, India can’t let go the immense opportunity, as the stakes are big.
According to a recent research by Allied Research, the global LGD or man-made diamonds market is estimated to be $ 55.6 billion by 2031, given the CAGR of 9.8%. As of 2019, China produced 56% of LGDs sold globally, while India and the US contributed 15% and 13% respectively. A key advantage for China is that it uses both the technologies for LGDs – High Pressure High Temperature (HPHT) and Chemical Vapour Deposition (CVD), while India is yet to adopt the HPHT method.
To be sure, the growth of India’s LGD industry has been fast-paced. Says Shashikant Shah, Chairperson, Lab Grown Diamond & Jewellery Promotion Council: “ In 2018, the export of LGDs from India was just Rs 300 crore, and the shipments rose to Rs 9,000 crore by 2022.” During the FY23, LGD exports crossed Rs 13,000 crore.
Currently, as many as 22 companies are there in the sector, with combined capacity of 4,800-5,200 reactors/machines. Over half of the units in Surat engaged in cutting and polishing of diamonds are now rendering these services for the diamonds developed in laboratories. Also, of 1.4 million workers employed in the diamond industry, around 0.8 millon are dealing with LGD too.
Besides being less expensive, LGDs are environment-friendly and have optical and chemical properties akin to natural diamonds. Consumer awareness about LGDs has improved in recent years, helping the market to grow at an accelerated pace.
The LGD industry may dominate the sector, even eclipsing natural diamonds, according to industry watchers. “By 2035 or so, LGDs will likely be referred to simply as ‘diamond,’ while the mining of natural diamonds will come down. LGDs have a promising future because unlike the American Diamonds, Zirconia and Physical Carbides, these are not the substitutes for the natural diamonds”, claimed Shah.
Smit Patel, Director, Green Lab Diamonds, one of the largest manufacturers of LGDs, which incidentally, also manufactured the diamond gifted to the US First Lady, said, “Four years ago, we had 40 workers and now there are over 2000. The current situation in the Indian market is similar to that in the US four years ago, with customers started inquiring about LGDs when buying diamonds.”
The industry sources also note that LGD sector, unlike in the case of natural diamonds, has the added advantage of completely local value-creation. It may be noted that, while India is a major exporter of gems and jewellery, the local value addition on imported merchandise is low.
“Considering the fact that 30-35% of the population falls in middle or upper middle income category, there is a great potential for lab grown diamonds in domestic and global markets,” said a market observer.
LGDs are also known as synthetic diamonds, man-made diamonds or cultured diamonds. Of the two methods of growing diamonds -HPHT and CVD – the latter is considered to produce better quality. HPHT technique is typically used to produce yellow or brown diamonds of lower economic value. The lab grown diamonds are certified by agencies like Gemological Institute of America (GIA), International Gemological Institute (IGI), Gemological Institute of India (GII), which also provide certification for natural/mined diamonds as well.
