ndia’s lab-grown diamond (LGD) sector has witnessed transformative growth, evolving along two key paths: fashion and jewelry, and industrial applications.
The industry is currently growing at an impressive 14.8% compound annual growth rate (CAGR). Leveraging its traditional strength in cutting and polishing, India is rapidly expanding its chemical vapor deposition (CVD) production capabilities, setting the stage for a broader global impact.
Fashion and Jewelry: A Rising Trend
Lab-grown diamond jewelry is gaining significant traction in India. Retailers are introducing specialized LGD brands, emphasizing quality and storytelling to appeal to consumers. Unlike the U.S., where natural and lab-grown diamonds are often sold together, Indian retailers are carving out distinct identities for their LGD offerings.
Key challenges include educating consumers about the value proposition of lab-grown diamonds and building brand recognition in an evolving market.
Industrial Applications: The Hidden Potential
Beyond fashion, the real innovation lies in industrial applications. Companies in Surat and Mumbai are producing high-quality diamonds for optics, quantum technologies, and electronics. While other regions like China, Europe, and the U.S. focus on jewelry-related products, India’s niche in industrial-grade raw materials positions it uniquely in the global market.
Challenges in the Industry
Despite its growth, the lab-grown diamond sector faces significant hurdles. Falling LGD prices have strained revenues, leaving many skilled workers underpaid or unemployed. These workers, though often lacking formal qualifications, bring invaluable expertise in crystal growth and polishing.
Unregulated competition has led to a market glut and plummeting prices, forcing producers to explore new markets and reestablish supply chains. According to diamond analyst Paul Zimnisky, LGD prices have dropped 90-95% over the past decade, with lab-grown diamonds now costing as little as 1/20th the price of natural diamonds.
This price drop has disrupted the industry, leading to bankruptcies, such as that of WD Lab Grown Diamonds, once the second-largest U.S. producer. However, it has also fueled consumer demand, with lab-grown diamonds now accounting for 20% of the $89 billion global diamond jewelry market, up from almost zero in 2015.
Regulatory and Market Developments
India is taking proactive steps to regulate the industry and protect consumers. The Gem and Jewellery Export Promotion Council (GJEPC) is collaborating with the U.S. Federal Trade Commission (FTC) to standardize terminology and establish guidelines for consumer protection.
China, another major producer, relies on Indian trade channels to access the U.S. market. However, low prices and thin margins have hindered its domestic industry’s growth.
The Road Ahead
India’s lab-grown diamond industry stands at a crossroads. While it faces challenges like oversupply and declining trust in some markets, it is also exploring new opportunities in both jewelry and industrial sectors. With strategic government policies and industry collaboration, India is poised to lead this evolving global industry.