Amidst the sharp drop in prices of lab-grown diamonds, the Indian government needs to give a leg-up to the Indian industry to help it continue its expansion by putting in place adequate policy measures, such as issuance of clear guidelines for its labeling and certification and imposition of quality control orders to restrict cheap imports, according to research body Global Trade and Research Initiative.
“India’s lab-grown diamond industry is facing a major challenge, with prices falling by 65 per cent in the past year, from ₹60,000 to ₹20,000 per carat. This sharp decline points to problems like overproduction, high imports, and lack of regulation, which are hurting consumer confidence. Urgent corrective steps are needed to get this high-growth industry back on track,” per the report.
The Indian lab-grown diamonds industry, based mostly in Surat and Mumbai, expanded considerably over the recent years producing 16 million carats of the sparkling rocks worth $2 billion in 2023-24, the GTRI report stated.
“India has become a key player in this sector, with much of its revenue coming from exports to major markets like the US and Europe,” it said.
In FY 2024, India imported lab-grown diamonds (both rough and cut and polished) worth $1.38 billion and exported worth $1.344 billion.
Lab-grown diamonds are identical to natural gem stones both chemically and physically and, as the name suggests, are manufactured in labs.
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Global demand
While global demand for lab-grown diamonds has been expanding over the last few years because they look like natural diamonds but cost less than a tenth, 2023 witnessed a sharp drop in global prices.
The global market for lab-grown diamonds in 2023 was worth an estimated $ 26 billion and is expected to reach $50 billion by 2030, the GTRI report noted. An estimated 40 million carats of lab-grown diamonds were produced in FY24.
According to various estimates, global prices of lab diamonds crashed by 30-60 per cent in 2023 and is expected to continue to decline in 2024 increasing competition for Indian players. This is attributed mostly to over-supply and rise in competition.
To address the challenges faced by the Indian lab-grown diamond industry, the GTRI report suggested that the government should set clear and consistent rules to standardise quality, certification, and market practices. This will reduce uncertainty and ensure fairness in the industry. “The Ministry of Consumer Affairs should create guidelines to clearly label and certify lab-grown diamonds in jewelry, and sales invoices should clearly state if the jewellery they sell include lab-grown diamonds,” it said.
It further proposed that India should consider issuing a Quality Control Order to check quality of imports as it has sufficient production capacity to serve both domestics and export markets.
Investing in research and development to improve production processes, reduce costs, and enhance the quality of lab-grown diamonds is also important, the report said. “This could include collaborations between industry players, academic institutions, and government agencies to drive innovation and ensure that India remains at the forefront of the global lab-grown diamond industry,” the report stated.