One of the incentives that the government had brought in is that it has permitted 100 per cent foreign direct investment (FDI) in the sector under the automatic route. Further, according to Budget 2019-20, the GST rate has been reduced from 18 per cent to 5 per cent. The year 2019, particularly, was the year for lab-grown diamonds.
India alone witnessed a sharp rise in lab-grown diamond exports worth $443 million which rose 102 per cent year-on-year. The report said even at the start of 2020, lab-grown diamond exports in India were up 60 per cent y-o-y, while natural diamond exports were down by 41 per cent y-o-y.
Industry experts said around five years ago, there were a handful of lab diamond growers but now, according to a report filed by Prabhudas Lilladher, their numbers have gone up tremendously in the last 2-3 years due to a recession in the natural diamond industry. This has meant a growing competition between lab diamond and mined diamond companies.
What is a lab-grown diamond?
The only difference between lab-grown diamond and natural diamond is that instead of digging the earth, it is created in a lab under a machine. Lab-made diamonds are developed from a carbon seed placed in a microwave chamber and superheated into a glowing plasma ball. The process creates particles that crystallise into diamonds in weeks.
This tech-based manufacturing directly cuts down the capital and labour-intensive factors of the mined diamond chain and so lab-grown diamonds cost 30-40 per cent cheaper than mined despite being 100 per cent diamond.
There are two types of lab-grown diamonds — CVD and HPHT. India particularly specialises and leads in the chemical vapour decomposition (CVD) technology that is certified as the purest type of diamonds.
According to the report, the Gemological Institute of America predicted the total annual sales of laboratory diamonds will be well over $100 billion in the not-too-distant future, from about $20 billion today. This segment of the diamond is growing at an annual growth rate of 15-20 per cent.
Surat: Diamond capital
Nine out of 10 diamonds in the world are estimated to be polished in Surat. Although the world is still waking up to lab-grown diamonds, in terms of polishing, Surat has taken rapid strides in the last 2-3 years. Currently, 25-30 per cent of diamond polishing units in Surat service lab-grown diamonds, with 15 per cent of units dealing only in the lab-created commodity. According to Dinesh Navadia, regional chairman for Gujarat, GJEPC, of the 7,000-8,000 diamond polishing units in Surat, the share of lab-grown diamond polishing used to be in single digits till 2019.