The lab-grown diamond markets in India- How big it is, strengths and challenges

India has the potential to become a global hub of lab-grown diamond production and processing. The recent industry update by Gem & Jewellery Export Promotion Council reported that India’s polished lab-grown diamonds exports amounted to $1.05 billion from April 2021 to January 2022. It recorded stellar growth of nearly 113 per cent and is projected to grow in numbers in the coming quarters. 

From a macro-perspective, The Indian Gems and Jewellery industry is counted to be one of the biggest industries and holds a significant majority of consumer markets in the world. The industry is contributing 29 per cent of the global consumption of jewellery. It has a vast market and employment base. The market offers jobs to around 4 million people on a yearly basis. As new players continue to enter the markets, the jewellery industry has over 3,00,000 gems and jewellery players. 

In 2021, India’s LGD market accounted for ₹2,200 crores, and its contribution to the global lab-grown diamond production stands at 15%. The growing market dominance of lab-grown diamonds can be attributed to technological breakthroughs and a sound shopping approach which has been taken by buyers post-Covid-19.

LGD market is growing exponential as they are greener and environmentally sustainable. They are also 50-60% cheaper than mined diamonds. After the pandemic, consumers are more practical and realistic in their buying decisions. They are choosing and constantly preferring cultured and lab-grown diamonds over natural ones. The international sales of lab-grown diamonds produced in India exceed that of domestic markets. India’s synthetic diamond exports are estimated to be anywhere around 50-60%. However, it is coming into its own and faring quite well in the domestic sector as well.

The industry has also warmed up to the idea of doubling the production of lab-grown diamonds to cater to increasing customers’ demands. The makers are fine-tuning their policies to adopt an environmentally friendly stand and promote lab-grown diamonds, which basically have the same characteristics as natural diamonds. The only point of difference is that lab-growns come with a yellow certificate. 

The financial hit that shook the industry and its consumer targets during the pandemic has resultantly made them more frugal about their expenditure and spending. People are naturally more inclined to pick lab-grown diamonds as their luxury asset or a token of gift to someone. It is cheaper, affordable, and does not cause any irreparable damage to ecological well-being. These reasons increase the buying quotient of lab-grown diamonds. 

Online orders and delivery services have also picked up transaction rates. Lab-grown diamond companies are also swept by the digital invasion and are advertising and selling their products on online platforms and websites. Increased brand visibility has also made them stand out from the rest and enhanced people’s knowledge about lab-grown diamonds.

One of the few challenges that the lab-grown diamond industry faces is a travesty of people’s judgement. L-G diamonds are often considered inferior and debased to natural diamonds, which is an inimical misrepresentation. Both of them carry similar physical and chemical properties. The only unsimilarity is that natural diamonds are mined, and lab-grown diamonds are created in labs.

The strength of the lab-grown diamond business is the growing common knowledge about the specialities and sustainability of lab-grown diamonds. Grave misunderstandings and canards about sustainable diamonds have mostly been effaced from the public eye. Consumers perceive it as an eco-friendly and cost-efficient luxury product. 

There is a growth in buying behaviours on justifiable and realistic terms among the new-age population. They do not want to engage in reckless spending on products which do not bring desirable returns. The emergence of this mindset is coiling them in favour of lab-grown diamonds. While natural diamonds are only affordable to upper strata-rich populations, lab-grown diamonds can be bought by mid-sized to income-based families. 

India's growing consumer pool of sustainable diamonds has put it to a competitor’s advantage. It will soon be pioneering a host of developments, seconding India as a lab-grown market hotspot.  Industry experts are of a consensus that LGD’s business has the capacity to touch the mark of ₹40,000 crores in the next five years. 

The fluorescence of lab-grown markets of India started in the mid-2000s and is growing exponentially in the 2020s. Despite facing a few setbacks during the Covid-19 pandemic, the business has registered a tall-order comeback. It has challenged the market hegemony of natural diamonds and completely taken over consumer luxury tastes. It has pandered to the prevalence of the sustainability yardstick mind built and formed a niche of its own. 

Major metro cities like the Delhi-NCR region, Calcutta, Chennai, and Mumbai have seen a major engagement for sustainable diamonds. It is also picking up pace in Tier-2 cities and, most probably, in a few years, will also break out in Tier 3 cities.

Authored by: 
Parag Agrawal, Co-Founder and CEO of Fiona Diamonds