india: lab-grown diamonds emerge from the shadow of natural diamonds
With the largest population of millennials in the world, India is seen to become the biggest market for lab-grown diamonds in the future, according to a report by Prabhudas Lilladher.
One of the incentives the government had put in place is that it allowed 100% foreign direct investment (FDI) into the sector under the automatic route. In addition, according to the 2019-2020 budget, the GST rate was reduced from 18% to 5%. 2019, in particular, was the year of lab-grown diamonds.
India alone saw a surge in exports of lab-grown diamonds worth $443 million, which were up 102% year-on-year. The report states that even at the start of 2020, India’s lab-grown diamond exports increased by 60% YoY, while natural diamond exports decreased by 41% YoY.
Industry experts said that about five years ago, there were a handful of lab-grown diamond producers, but now, according to a report filed by Prabhudas Lilladher, their number has increased dramatically over the past 2- past 3 years due to a recession in the natural diamond industry. . This has led to increasing competition between lab-grown diamond companies and mined diamond companies.
What is a lab-grown diamond?
The only difference between lab-grown diamond and natural diamond is that instead of digging into the earth, it is created in the lab under a machine. Lab-made diamonds are grown from a carbon seed placed in a microwave chamber and superheated in a glowing plasma ball. The process creates particles that crystallize into diamonds within weeks.
This technology-based manufacturing directly reduces the capital and labor intensive factors of the mined diamond chain. Thus, lab-grown diamonds cost 30-40% less than mined ones, despite being 100% diamonds.
There are two types of lab-grown diamonds: CVD and HPHT. India is particularly specialized and a leader in Chemical Vapor Decomposition (CVD) technology which is certified as the purest type of diamond.
According to the report, the Gemological Institute of America has predicted that total annual sales of lab-grown diamonds will well exceed $100 billion in the not-too-distant future, up from around $20 billion today. This diamond segment is growing at an annual growth rate of 15-20%.
Surat: Diamond Capital
It is estimated that 9 out of 10 diamonds in the world are polished in Surat. Although the world is still waking up to lab-grown diamonds, in terms of polishing, Surat has made rapid progress over the past 2-3 years. Currently, 25-30% of Surat’s diamond polishing units service lab-grown diamonds, with 15% of units only processing lab-created products. According to Dinesh Navadia, Gujarat Regional Chairman, GJEPC, of the 7,000 to 8,000 diamond polishing units in Surat, the share of laboratory diamond polishing was in single digits till 2019.