The Union Finance Minister's decision to promote Lab Grown Diamonds (LGD) is not going to have a big impact on India's overall gems and jewellery exports, but it is a decision to tap an opportunity of the future, say industry sources.
"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," said the Finance Minister, who also decreased import duty on LDGs to nil from 5% to reduce the cost of production.
Industry sources say while India is a global leader in cutting and polishing of natural diamonds contributing about three-fourths of the global turnover by value, LDG is now a very small but growing segment. Provisional gross exports of Polished Lab Grown Diamonds from April to December last year were worth ₹10,587.36 crores, with a growth of 44% over the previous year, says the Gem & Jewellery Export Promotion Council (GJEPC) data. As against this, overall gross exports of Gems & Jewellery were worth ₹2,27,534.50 crores for the same period. Industry sources say just recently only two exclusive outlets for LGDs were started in Mumbai and it is yet to gain traction among Indian gem and jewellery consumers.
"As per the new budget, customs duty on lab grown diamonds will be reduced, which is a welcoming step for the gems and jewellery industry. This will help in making jewellery more affordable for the common man", says Pankaj Khanna, chairman, Khanna Gems.
LGD is a technology-and innovation-driven emerging sector with high employment potential and these environment-friendly diamonds have optically and chemically the same properties as natural diamonds.
Exporters feel diamond cutting hubs like Surat can become one of the leading manufacturing centres in the world for lab grown diamonds, if India is able to make adequate lab grown diamonds.
With the depletion in deposits of natural diamonds, the industry worldover is moving towards Lab Grown Diamonds (LGDs) and it holds huge promise for the future. A report from Allied Market Research says the global lab grown diamonds market size is projected to reach $49.9 billion by 2030, registering a compounded annual growth rate (CAGR) of 9.4% from 2021 to 2030. Another factor for the shift to LGD they cite are many customers feel some natural diamonds mined from some of the African countries and other parts of the world are directly or indirectly associated with 'blood money,' linked to terrorism, drugs and smuggling. Further, cost of production of lab diamonds, which include very complex chemical processes, have reduced by 90% in the last decade due to advancement of technology. Now the cost of a lab diamond can be 30-50% cheaper than natural diamonds according to its finish and quality, say sources.
In the west, LDG is gaining popularity as many youngsters see it as a replacement for very costly natural diamonds. About 99% of the mining of natural diamonds is in nine countries, dominated by Russia (with about 1100 million carats of reserve), Botswana, the Democratic Republic of Congo (DRC), Australia and Canada. Just these five contribute to more than 60% of the world’s diamond production. The leader Russian company Alrosa, which operates mostly in Siberia, accounts for 94% of Russia’s total diamond production and 25% of the world’s diamonds in circulation. The others are London based De Beers, which also has a 50:50 joint venture in Botswana called Debswana Diamond Company, Anglo-Australian mineral mining multinational Rio Tinto Group and Canadian company Dominion Diamond.