India has long been known as the world’s diamond cutting and polishing hub. 90% of the world’s rough diamonds are polished in India, with Surat, dubbed the “Diamond City” handling a majority of global diamond processing.
But in recent years, India is emerging as a new kind of diamond hub: that of lab-grown diamonds or LGD. These synthetic diamonds are gaining traction and disrupting the market. According to CNBC report, the global lab‑grown diamond market is currently valued at $15 billion, and in India, demand is rising sharply, growing by 15–20% each year. And after the United States, India is quickly emerging as the next major market for these synthetic gems.
Here’s a closer look at the LGD sector, what’s driving growth, and the challenges and opportunities ahead.
Lab-grown vs Earth-mined: Understanding the difference
We need to go back to science class to understand the difference between the two. Lab-grown diamonds (LGD) are crafted inside a lab, made by human hands, via high-pressure processing. Earth-mined diamonds, as the name suggests, are mined from the earth.
Lab‑grown diamonds, also called synthetic or cultured diamonds, are created in a laboratory to have the same characteristics as natural diamonds. They’re made using advanced technology that mimics the way diamonds form deep inside the Earth. There are two methods used to create lab‑grown diamonds:
- CVD (Chemical Vapor Deposition): In this method, a tiny diamond “seed” is placed in a sealed chamber filled with a carbon‑rich gas. The gas is heated until it breaks down, allowing carbon atoms to build up on the seed and form a larger diamond.
- HPHT (High Pressure High Temperature): This technique mimics the natural process deep within the Earth. A diamond seed is placed in a machine that applies extremely high pressure and temperature, causing the seed to grow into a larger diamond crystal.
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Both methods produce diamonds that have the same physical, chemical, and optical properties as natural diamonds. The main differences come down to cost, colour, quality, and shape. CVD diamonds tend to be less expensive, more colourless, and have fewer imperfections. HPHT diamonds are generally more costly and can have a more colourful, cuboctahedral (14 faces) shape.
Natural diamonds, on the other hand, form when carbon atoms deep in the Earth are exposed to intense pressure and heat over billions of years. They rise to the surface through volcanic activity or erosion and are then mined. The formation itself takes years and the mining and extraction process is time and labour-intensive.
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Why lab-grown diamonds are more economical
Lab-grown diamonds and natural diamonds have a similar sparkle, but LGD cost far less than their earth-mined counterparts. And there are a few reasons why.
- Lower production costs: Mining diamonds involves enormous expenditure: labour, heavy machinery, specialised equipment, environmental reclamation and geopolitical risks. Lab-grown diamonds bypass these costs entirely, requiring only equipment, energy, and a laboratory. Producing diamonds in a controlled lab environment is far more resource‑efficient and less complex than traditional mining, resulting in lower overall costs.
- Shorter supply chain: The supply chain for LGDs is much leaner. LGD doesn’t involve intermediaries like mining companies, traders, and extensive logistics across continents. Manufacturers can sell directly to retailers or even consumers, reducing the markup.
- Scalability and availability: Natural diamond production is limited by geological availability and operational constraints. In contrast, lab-grown diamond production is scalable and consistent. The supply of lab-grown diamonds can be more easily controlled, while earth-mined diamonds have a limited supply and are subject to geopolitical influences, resulting in price fluctuations and volatility. This demand-supply factor is what allows for the relatively stable pricing of LGD, which appeals to consumers.
Why the lab-grown diamond sector is growing
Lab grown diamonds come at a much more economical price. Based on a report in the Economic Times, a natural 1-carat solitaire of SI clarity in 18-carat gold comes with a price tag of 2 lakh plus at branded jewellery outlets. On the other hand, a lab-grown 1-carat solitaire with VS clarity comes at almost half the price, at around 1.12 lakh. This makes LGD more attainable to a larger consumer segment. But price aside, there are several other reasons why the LGD sector is growing, from both the consumer and manufacturer side. (VS or Very Slightly Included and SI or Slightly Included are both clarity grades on the diamond scale, with VS ranking higher than SI. Diamonds with a VS grade have inclusions that are very challenging to spot, even under 10x magnification, and typically appear flawless to the naked eye. SI diamonds, on the other hand, have slightly larger inclusions that are noticeable under magnification and, in some cases, can be seen without any visual aid.)
- Govt incentives: In the 2023 Union Budget, the Indian government allocated significant funding toward the research and development of lab-grown diamonds. It also removed import duties on the raw materials used to make LGDs: previously, there was a 5% customs duty on the seeds used in lab-grown diamond synthesis. (Seeds are tiny diamond particles that form the starting base to create cultured diamonds.) The Budget stated, ““To encourage indigenous production of LGD seeds and machines and to reduce import dependency, a research and development grant will be provided to one of the IITs for five years.” These moves signalled strong institutional support for the sector, encouraging local entrepreneurs to invest in LGD startups and production facilities.
- Higher margins: Although lab-grown diamonds sell at lower prices, their production costs are significantly lower too. As a result, the margins can be higher, especially for companies that control the process from manufacture to retail.
- Market expansion: Unlike natural diamonds, which are seen as aspirational luxury items, lab-grown diamonds are affordable enough to reach a broader customer base. This includes not just bridal jewellery, but also everyday and fashion jewellery markets. The ability to serve multiple customer segments increases total addressable market and long-term profitability. (Tata’s Trent Retail launched its own line of lab-grown diamond jewellery under the brand name Pome in 2024.)
- Ethics: There’s also the ethics of diamond mining, which many conscious consumers today consider before purchasing. If you’ve seen the movie Blood Diamond, then you’re aware of the murky dealings and corrupt underbelly that is part of the mining process. If stones of a similar quality can be acquired minus the unethical practices, consumers are willing to purchase them.
- Export opportunities: India is exporting an increasing volume of lab-grown diamonds to markets like the United States, Europe, and the Middle East. Data from a report in The New Indian Express puts India’s LGD exports at USD 1.7 billion in FY23, registering a growth of 8x over 4 years.
According to the Gem and Jewellery Export Promotion Council (GJEPC), for the period of April 2022-March 2023, provisional gross export of Polished Lab Grown Diamonds grew 37.31% to touch Rs 13,466 crores, up from Rs. 9,807 crores for the previous year. The U.S. remains the biggest market, where LGDs are seen as an affordable, ethical alternative to natural diamonds, followed by the UAE.
A sparkling future?
However, there are certain concerns. Despite its rapid rise, the lab-grown diamond sector in India does face two main challenges. First is the issue of energy consumption. LGD production, particularly through the HPHT method, consumes significant energy. A report from Statista, published in 2024, states that as of 2021, lab-grown diamonds produced via the High Pressure High Temperature (HPHT) method showed the widest range of energy usage, consuming between 28 kWh and 245 kWh per carat. In contrast, natural diamond mining had the narrowest range of energy usage, requiring between 96 kWh and 150 kWh per carat. However, moving toward renewable energy solutions can address this problem.
The other pressing challenge is public perception and consumer sentiment around the quality of LGD. LGD are not cubic zirconia, but some consumers still view them as inferior or artificial. There’s also the concern that LGD will not have the same resale value as natural diamonds, as the market is still evolving. Plus, the industry as a whole lacks clear regulations and there is a lack of proper certifications, which results in low trust.
But despite concerns around energy consumption and the resale value argument put forth by purists, India’s lab‑grown diamond industry is coming into its own and making gains. According to a report titled “Manufacturing of Lab Grown Diamond” from the gems and jewellery sector of the Government of Gujarat, the market is on track to grow at a robust 14.8% annual rate between 2023 and 2033. The jewellery segment alone is expected to climb from $264.5 million in 2022 to roughly $1.19 billion by 2033. Fuelled by rising consumer awareness, surging global demand for sustainable luxury, and India’s distinctive edge in craftsmanship and design, the lab‑grown diamond space looks like it is poised for an impressive run in the years ahead.
Sources
Limelight Diamonds: The Rise of Lab Grown Diamonds in India: Market Trends and Predictions
Technopak: Lab Grown Diamonds: The Sparkling Revolution in India’s Diamond Industry
CNBC-TV18: How lab-grown diamonds are shaking up the Indian jewellery industry
Economic Times: Natural vs lab-grown diamonds: The dazzling duel shaking up India’s jewellery market
Report: Manufacture of Lab Grown Diamond
Varniya: Are lab-grown diamonds cheaper?
Giva: Lab diamonds vs mined diamonds cost comparison
Queensmith UK: Lab Diamonds vs Real Diamonds
Volza: Lab Grown Diamond Rough Exports From India Market Size & Demand Based On Export Trade Data
New Indian Express: How the lab grown stones pose as a game changer
The Secretariat: India’s Lab-Grown Diamonds Have Just Got Shinier