Walk into the manufacturing unit of Green Lab Diamonds at Surat and a framed picture of Prime Minister Narendra Modi unveiling a lab-grown diamond to be gifted to US First Lady Jill Biden, adorns the corridors. “A proud supplier of 7.5 carat round diamonds that reflect the country’s prowess and strengthens relations,” reads the caption under the picture.
It’s a hive of activity inside the manufacturing unit at Gujarat Diamond Bourse, where more than 3,500 workers are hard at work polishing and chiselling the sparkling stones. Green Lab Diamonds is one of the biggest manufacturers of lab-grown diamonds (LGDs) in the country.
Though the diamond industry has lost its sparkle somewhat due to the downturn, Green Lab Diamonds is now readying a 4 lakh square feet facility which will help it double its capacity from the current 1600 reactors — a diamond growing chamber — that mimics the conditions inside the earth’s crust and grows diamonds at 1,000-1,200oC.
“We have seven units in Surat. We are not only growing the diamonds in our labs, we are also cutting and polishing the manufactured rough diamonds and exporting them. We earn more than those involved in the business of natural diamonds do,” says Sanket Patel, director of Green Labs that entered the LGD business in 2016.
Hailing from a family that has been in the business of cutting and polishing natural diamonds for 50 years, Patel says it was his father’s call to enter the lab-grown diamond space. “Currently there is a lot of negative sentiment in the diamond industry. Despite this, our manufacturing units that usually operate between 9:30 am and 6:30 pm have extended working hours till 9 pm. We have a lot of orders and so we are doing overtime,” he says.
Patel is lucky as the downturn in the diamond industry world-wide has had a ripple effect in Surat, which depends a lot on exports. Diamond business owners blame the Russia-Ukraine and Israel-Palestine conflict for the current situation. The sanctions imposed by the US and the ban by G7 countries on diamonds from Russia (it is one of the largest suppliers of rough stones) have impacted the trade in Surat.
While Sanket Patel wants to wait for “market conditions to improve” , he says, “There are about 11,000 LGD reactors in Surat, of which 4,000 would have closed down due to present market conditions. My uncle who is also in this business has closed down 1,500 reactors.”
Official data from the Gem and Jewellery Export Promotion Council (GJEPC) show that the exports of lab grown diamonds grew by over 100 per cent in 2021-22. The growth continued in 2022-23 seeing 28 per cent growth in exports. However, in 2023, exports of lab grown diamonds fell for the first time. The gross exports declined by 16.5 per cent falling to $1,402 million (₹11,611 crore) from $1,680 million (₹13,468 crore) in 2022-23.
Smit Patel, Convenor of Lab Grown Diamond Panel at GJEPC and lab-grown diamond manufacturer says, “The value of exports of lab-grown diamonds have dropped, but the volumes in terms of carats have risen. The only thing that has dropped since LGD business started is the price per carat. It is a non-monopolised business and so there is a value correction.”
He adds, “There was a rush of players entering the LGD business in the last five years. Now such people are exiting the business. The people who remain are those with a long-term vision. They are looking at creative ideas, different cuts, fancy shapes and the possibilities are endless because it is a lab-grown product.”
Stealing share
Lab-grown manufacturers like Smit Patel, who export 70 per cent of the diamonds to the US, UK, Europe and Australia, say consumers there are willing to pay a premium for a consistent supply of high-quality lab-grown diamonds in unusual cuts and colours that do not exist in the natural rock. “The lab-grown industry is definitely eating into the share of natural diamonds. With attractive prices, people are preferring lab-grown diamonds. We are making 100 per cent Type-II A diamonds. Only a couple of mines in the world produce these pure diamonds,” he added.
Since 2018, LGDs which are chemically, optically and physically identical to natural diamonds have been sparkling in Surat. The industry has specialised in growing diamonds using the Chemical Vapour Deposition or CVD process which require smaller and less expensive equipment compared to the high temperature method. Manufacturers have embraced this process as it allows them to grow diamonds quickly and cheaply, thereby keeping their workers busy and factories humming.
Players in both the natural and lab grown diamond space are on the same page when they say that the lab grown diamond industry has helped mitigate some of the adverse impacts of the downturn, especially when it comes to absorbing laid off workers. Though there are no official figures to map this transition, Jagdish Khunt, President of Surat Diamond Association (SDA) who represents the players in the natural diamond business says, “The situation is not as bad as it was in 2008, when the entire industry came to a halt. The sales are down 25-30 per cent. Stocks are piling up... The diamond worker who used to earn ₹50,000 a month is now earning 30 per cent less as his work hours have been reduced and more holidays are being given. However, if it was not for the lab-grown diamond industry, a lot of them would be on the streets. It has been a blessing and a support for us.”
Unlike natural diamond players, the lab grown diamond players are not making losses, he says. In 2023-24, the overall exports of cut and polished diamonds from India stood at $15,966.47 million (₹1,32,128.29 crore), a decline of 27.58 per cent when compared to $22,046.9 million (₹1,76,716.06 crore) for the same period of previous year. “Our diamond industry is 90 per cent dependent on sentiments in the overseas market. We are just hoping that there will be some improvement before the Christmas season. Currently our sales are down 30 per cent compared to last year and our stocks are rising,” Khunt added.
Representatives of the Diamond Workers Union in Surat say the downturn has affected both natural and lab-grown diamond segments. “The time period after Janmashtami is usually when the diamond industry in Surat is at its peak in preparation for the upcoming festive season. However, since the last six months, the situation has been bad with reduced working hours and layoffs. Our estimate is that 200 small units have shut down and 60,000 odd workers have been laid off. Some of them got absorbed by the lab-grown diamond units,” says Bhavesh Tank, Surat City president of the Union.
Right now the lab grown diamond players are proving to be a rock — but if things don’t improve, even the rock may crumble.