Lab Grown Diamonds: The eco-friendly sunrise opportunity?
Lab Grown Diamonds (LGDs) are gaining popularity with evolving global requirements as they offer sustainable solutions to modern challenges. India produces over three million lab-grown diamonds a year and accounts for 15% of global production. India’s lab grown diamond market size is expected to swell from US$ 299.9 million in 2023 to 1,192.3 million by 2033.
In 2022, exports of lab grown diamonds from India recorded a growth of 51% YoY, with exports worth US$ 1,780.59 million against US$ 1,178.77 million in 2021. As LGDs are grown in labs and are much affordable than naturally mined diamonds, it has opened a new consumer and industrial market in India and across the world.
Image Credit: Pixabay
Diamonds, also known as a girl’s best friend, are among the most loved precious stones across the world. The global diamond market was valued at around US$ 95 billion in 2021, and projected to reach around US$ 140 billion by 2030, growing at a projected CAGR of 4.4% during the period. They are widely used in the jewellery industry as well as for various industrial applications, including polishing and cutting tools. India is the world’s largest exporter of diamonds, being home to over 90% of global diamond cutting and polishing units. In 2021-22, diamond exports (HS 71023910) were estimated at US$ 24.4 billion with US, Hong Kong, Belgium, UAE and Israel being the top markets.
Within this sector, lab-grown diamonds are now emerging as a high potential product segment. The global lab grown diamond market was estimated at US$ 22.45 billion in 2022, and is forecast to grow to US$ 37.32 billion by 2028. In 2018, the US expanded its definition of diamonds to include lab-grown (previously referred to as synthetic), which was a major boost from the export perspective. They are also considered eco-friendly, since they do not involve mining. Moreover, they are considerably cheaper than natural diamonds for the same or better quality.
Recently in the budget, Finance Minister Nirmala Sitharaman announced that lab-grown diamonds will now be a focus category for exports, and also removed basic customs duty on carbon seeds used in their manufacturing. Just as LGDs are slowly gaining momentum in the Indian market, it has also kicked off popularity among other nations. As there is a depletion in natural diamond resources, Lab Grown Diamonds (LGDs) are increasingly gaining traction. As of financial year 2021-22, India’s share in global trade of LGDs was 25.8%, although the country has to rely on imports for critical machinery, components and seeds, which are required for producing synthetic diamonds.
India’s Lab Grown Diamond Exports
|Cut and Polished (Worked) Lab grown Diamonds||473.65||637.97||1,348.24||1,387.33|
Source: pib.gov.in, Values in US$ Million
Production process for lab-grown diamonds
Lab-grown diamonds are developed from a carbon seed placed in a microwave chamber and superheated until it transforms into a glowing plasma ball. This process creates particles that crystallize into diamonds within weeks. Where naturally grown diamonds take millions of years to form deep within the earth with exposure to great heat and pressure, the LGDs are created within a span of just two weeks. LGDs are produced through two technologies – High Pressure High Temperature (HPHT) and Chemical Vapour Deposition (CVD). India is one of the leading producers of lab grown diamonds using CVD technology.
High Pressure High Temperature (HPHT): In this process, a small diamond seed is placed into pure carbon, which is then exposed to intense pressure and heat. The carbon melts and the diamond begins to form around the seed. The substance is then cooled and carefully cut, polished and set into jewellery like a naturally grown rough diamond. The HPHT treatment process is permanent, and the diamond’s exceptional shine is maintained through ages, without any further expenses.
Chemical Vapour Deposition (CVD): In the CVD process, a thin diamond seed is placed in a sealed chamber which is heated to around 800 degree and flooded with carbon rich gas. Once the gas ionises, it breaks down into pure carbon which attach to the original diamond seed. The process is further continued until a fully formed diamond is created. A 1 carat diamond can be created within a month via CVD process, whereas smaller diamonds take about two weeks’ time.
Vipul Shah, Chairman, Gems and Jewellery Export Promotion Council states,
“The lab-grown diamond market in India is witnessing a steady rise in demand, with a growing number of consumers opting for lab-grown diamonds due to the affordability of the product. Retailers and online platforms are also offering a wide range of lab-grown diamonds to meet the increasing demand.
In terms of pricing, lab-grown diamonds are considerably cheaper than natural diamonds, with some estimates suggesting that they are 80-90% cheaper. This makes them an attractive option for consumers who are looking for diamonds at a lower cost. As a result, LGDs have carved out a consumer segment base within the jewellery market.”
Lab grown diamonds vs natural diamonds
Over the ages, conventionally produced diamonds ruled the global markets, but with the invent of LGDs, the scenario is gradually changing. Since the process of creating LGDs is sustainable, much simpler and the finished product is chemically identical to mined diamonds, jewellers and diamond lovers across the world are gradually gravitating towards LGDs. The below table lists various benefits of LGDs over traditionally mined diamonds:
Comparison of lab grown and naturally mined diamonds
|Lab Grown Diamonds||Naturally mined Diamonds|
|No dirt or impurities ingrained||Impurities and strains in crystal structure|
|Affordable even in better quality||Can be expensive because of their natural clarity and hard mining process|
|Created with little to no environmental damage||Mining natural diamonds is linked to water pollution due to acid mine drainage|
|Guaranteed origins and trackable source||Natural diamonds can come from conflicted regions|
Source: Various media reports
LGD market scenario and opportunities
India is currently the world’s largest producer of CVD diamonds and holds the potential to become the largest LGD supplier. According to sector analyst Prasad Kapre, “We have a tremendous opportunity. We are only 10% of market share yet and have space to take over the remaining 90%.”
LGDs are not just confined to jewellery and can be used for several industrial purposes like computer chips, 5G networks etc. Moreover, they can be used in extreme environments due to their potential to operate at higher speeds while using less power than silicon-based chips. With their vast applications in the fields of defence, optics, jewellery, thermal and medical industry, LGDs offer huge business and investment opportunities.
In 2022, India’s lab-grown diamond jewellery market was valued at US$ 264.5 million. By the end of next decade, lab-grown diamond jewellery sales are expected to rise at 14.8% CAGR, increasing the market size from US$ 299.9 million in 2023 to US$ 1,192.3 million by 2033.
Unlike naturally mined diamonds which cause harmful environmental impact, LGDs can be actually used for environmental benefits, since the precious stone is used as jewellery for only 30% of the market, with the rest sold for drilling, cutting and grinding etc. Here are some of the areas where lab grown diamonds can be a game changer:
- LGDs can be used in disinfecting polluted water sources by adding mineral boron during the diamond growing process to create a “boron-doped diamond” which conducts electricity. By then applying current to the diamond, it oxidizes toxic organic compounds in a process called mineralization, turning them into biodegradable form.
- Lab Grown Diamonds are ten times more durable than natural diamonds and offer purity and hardness, making them suitable to use for industrial purposes.
- A thin coating of diamond can be used to reduce friction in moving mechanical parts from windmills to cars. In contrast with lab diamonds, mined diamonds do not offer purity required for these applications.
A sparkling future?
The gems and jewellery sector plays a significant role in the Indian economy with a share of around 7% to GDP and 10-12% to the country’s total merchandise export. In 2022, export of lab grown diamonds from India recorded a growth of 51%, with exports worth US$ 1,780.59 million against US$ 1,178.77 million in 2021.
The Union Budget 2023-24 proposed to establish an India Centre for Lab grown Diamond at IIT Madras with an estimated cost of Rs 242.96 crores over next five years. The project aims to provide technical assistance to the industries and entrepreneurs in the country to promote indigenous manufacturing of both Chemical Vapour Deposition (CVD) and High Pressure and High Temperature (HPHT) systems along with expansion of Lab Grown Diamond business.
The research efforts would make the technology available for start-ups at affordable cost, boost self sufficiency, increase employment opportunities, increase exports of LGD, thereby opening up a new growth sector for the industry.
Nice article. It would be better, if you could include places in India, where LGDs fabricated. I think, Mostly LGDs industries are in Surat.