As the festive season rolls on with Diwali around the corner, the diamond business in India is witnessing a major trend. While the traditional diamond polishing business in Surat is suffering amid the current geopolitical landscape and the Russia-Ukraine war, lab-grown diamonds (LGDs) are emerging as popular alternatives to natural diamonds.
The situation in Surat
As per media reports, the diamond business in Surat is seeing a notable decline, as the Ukraine War has disrupted the supply of rough diamonds.
An ANI report quoted Dinesh Navadia, the Regional Chairman of the Gems and Jewellery Export Promotion Council, as saying that prior to the war in Ukraine, approximately 1.75 lakh carats of raw materials used to enter Surat from Russia.
The current situation has, however, resulted in a scarcity of essential raw materials.
Navadia pointed out that a substantial portion, ranging from 30 to 35 per cent of rough diamonds imported from Russia’ Alrosa, typically find their way to the Indian market for cutting and polishing, with Surat and Mumbai being key centres for these activities.
Diamond businesses in Surat have still not recovered, threatening the livelihoods of local artisans.
Trade associations such as the Gems and Jewellery Export Promotion Council (GJEPC) are still working to open up new markets in West Asia and the Far East.
Despite receiving interest from potential buyers in Hong Kong and Dubai, the demand for Indian products remained low due to the geopolitical situation.
With the initial scarcity of raw materials and the present slump in demand for natural diamonds, LGDs have begun to thrive in the Indian market.
According to an Economic Times report, industry experts anticipate that LGDs would sell more during this festive season, driven by increasing consumer acceptance. Manufacturers have introduced buyback programs, and the retail network is expanding, which is likely to lead to a significant year-on-year growth of up to 60 per cent during this period.
Notably, lab-grown diamonds are no longer limited to the 18-35 age groups, as even high-net-worth individuals (HNIs) have developed an interest in them. Previously, lab-grown diamonds were primarily favoured by the younger demographic, who found them more affordable than natural diamonds.
According to Lisa Mukhedkar, the founder and CEO of Aukera, LGDs have emerged as “the choice” for their cut, colour, clarity, and carat weight. They have also become a sustainable option for environmentally conscious consumers, she said.
On a similar note, Abheek Mehta, the Co-founder of Amal Jewels, mentioned that lab-grown diamonds are identical in terms of their physical and chemical properties, including their designs. He also noted that the primary distinction lies in the pricing, with the price difference increasing as the size of the diamond becomes larger. According to him, lab-grown diamonds are typically 50-60 per cent more affordable.
“The demand for natural diamonds is slowing down since lab grown diamonds are a cheaper substitute with the exact same qualities,” Mehta said.
“Natural diamonds are not doing well even in international markets like the US and China,” he noted.
Commenting on the differences in price, Lisa Mukhedkar said, “Smaller stones come at 60 to 70 per cent of the cost of their mined counterparts, and for larger carats and fancy shapes, the savings can be as high as 80 per cent. This makes it a sound investment choice.”
Mehta said the one-carat LGD rings are being sold for about 50-60 thousand rupees, while natural diamonds would cost about 6-7 lakh rupees.
Previous reports suggest that the market for LGDs is thriving due to the current geopolitical situation and the limited supply of diamonds from Russia. However, Mukhedkar also attributed the LGDs’ increasing popularity to the expansion of the “solitaire market”, notably in the USA, which in turn has sparked a similar trend in India.
During the ongoing festive season, Mehta is optimistic about the sales for LGDs. “Considering that we’ve seen a lot of enquiries and sales during the festive season, we expect strong sales during this period until Diwali,” he said.
Mukhedkar said that the festive season is likely to witness increased sales of LGDs as they provide better value to customers. “Furthermore, customer awareness about the advantages of grown diamonds is leading to increased demand,” she added.
Speaking of the anticipated trends in the diamond market, Mehta of Amal Jewels said, “There may be a few rare natural diamonds that are bigger in size which will be priced appropriately to their value. However, LGDs are set to replace diamond jewellery that is worn on a daily basis.”