India’s diamond industry has a history as rich as diamonds themselves. The fine craftsmanship moulded by centuries of expertise has transformed India into a global powerhouse in the diamond industry. While India has always led the global diamond and jewellery market, the economic upturn in the last two decades has been pivotal as one of the major forces in the diamond market. However, the scale of the past year’s geopolitical and economic disruptions has left a mark on the overall demand dynamics of the diamond market.
As a result, there has been a sustained decline in India’s diamond exports for most of 2023. As per a report from GJEPC, the gross export dropped from $23.8 billion to $18.24 billion between April and October 2023. The volatility in the naturally mined diamond market is largely attributed to the unstable global economy, leading to lower disposable incomes. In addition, the public perception of mining has been gradually changing towards the negative, with sustainability now becoming a globally recognised concern.
Also read:India’s suspension of rough diamonds import ends
A ray of hope
Amid this bleak scenario, lab-grown diamonds (LGDs) provide a ray of hope to the Indian diamond industry. It would make sense that, in the face of challenging times for the Indian gems and jewellery market, lab-grown diamonds can play a crucial role. The demand for LGDs has been gradually but consistently on the rise in the domestic market. Globally too, these man-made diamonds have performed well based on the longer-term trends, with sales increasing from under $1 billion in 2016 to just more than $12 billion in 2023. They represent just over 17 per cent of the overall diamond market, and the rate of growth is accelerating. As a result of this, a report from CNN stated that LGD sales shot up 38 per cent from 2021 to 2022.
As for the lab-grown diamond market in India, things have never looked better. According to a report from GJEPC, the growing demand for LGDs in domestic markets is providing much-needed support to the struggling Indian gems and jewellery industry. Irrespective of the 25 per cent decline in exports, LGD carats (cut and polished) shot up to 20 million between April and July 2023, a 5.57 per cent rise over the same period in 2022. Contrary to this, there was a decline of 26 lakh-carat in mined-cut and polished diamonds (CPD).
Way forward
GJEPC further states that India is the biggest contributor with a 25 per cent share of the overall production. Producers have lowered prices significantly, and there is no indication of a further decline. As per the findings of Teji Mandi, the demand for LGDs is anticipated to touch 160 million carats by 2030. Markets such as India, the Gulf, and China are increasingly turning towards lab-grown diamonds owing to factors including affordability and sustainability.
Looking at the way forward, the demand for naturally mined diamonds will continue to stay relevant in the market, while the demand for LGDs is expected to grow manifold during 2024, with steeper competition from India to other prominent LGD-producing countries. This growing demand for LGD in both domestic and international markets will not only help mitigate the impact of export decline, but also provides a platform for the development and improvement of the industry at large.
The author is MD, Kama Jewelry