The appeal of lab-grown diamonds (LGDs) is on the rise in India, driven by the country’s burgeoning youth population. Millennials and Gen Z shoppers, enticed by the affordability of LGDs, have contributed to their increasing popularity, according to industry analysts cited by CNBC.
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LGDs, identical in chemical composition to natural diamonds, can be up to five times cheaper. Limelight Diamonds, a prominent LGD jewelry brand in India, revealed that while a natural diamond costs approximately $6,000 per carat, its LGD counterpart is priced at just $1,200. Both types are graded based on the traditional 4Cs—clarity, color, cut, and carat—which determine a diamond’s value and quality.
Lab-Grown Diamonds
The surge in LGD sales is attributed to the accessibility they offer to buyers who were previously deterred by the high cost of natural diamonds. Pooja Sheth, founder and managing director of Limelight Lab Grown Diamonds, highlighted the shift, stating, “Previously, less than 5% of Indian women were able to afford natural diamonds.” The affordability of LGDs has opened up the market, with a significant influx of first-time buyers.
India currently ranks as the second-largest producer of lab-grown diamonds globally, trailing behind China. Industry experts, including Edahn Golan, CEO of Edahn Golan Diamond Research and Data, express optimism that India could surpass China in the near future. Golan attributes India’s potential dominance to more sophisticated technology and continuous improvement in the manufacturing process.
Despite the growing popularity of LGDs, analysts anticipate that buyers view them as an entry point into the diamond market. As purchasing power increases, buyers may transition to natural diamonds. Tehmasp Printer, CEO of the International Gemological Institute, compared the transition to an upgrade, stating, “If you have a Toyota, you’ll want to buy a lower-end BMW before you finally get a [Mercedes-Benz] S-Class. It’s a question of upgrade.”
The positive outlook for LGDs in India received a boost during Prime Minister Narendra Modi’s state visit to the White House, where he gifted First Lady Jill Biden a 7.5-carat gem produced in India. This gesture shifted perceptions and contributed to the growing acceptance of lab-grown diamonds.
While the LGD market is rapidly expanding, experts believe it will not significantly impact natural diamond sales. Paul Zimnisky, CEO of Paul Zimnisky Diamond Analytics, noted that man-made diamonds currently represent around 20% of the total industry in terms of value sold. Zimnisky highlighted that the softening of diamond prices in 2022 was mostly a return to normalization after a peak following the global lift of COVID-19 restrictions.
Concerns have been raised about potential challenges for the LGD industry if prices continue to fall rapidly due to increased production. Zimnisky warned that retail prices for lab-grown diamonds may not reflect the lower raw material prices, and if the trend persists, LGD prices could further decline. The analyst predicted the possibility of a three-carat LGD solitaire ring eventually selling “well under $1,000.”
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