The Lab-grown Diamonds (LGDs) exports are expected to witness a revival in FY25, with exports expected to grow by 7-9% to reach a value of~US$1500-1530 million, according to CareEdge Advisory.
LGD exports have been declining in recent time, and have seen around 16.5% decline y-o-y for FY24. While the sales volume of LGDs have been growing, the declining prices have impacted the exports. Nevertheless, the depreciating rupee is likely to act as a cushion for the industry, believes CareEdge Advisory.
Going forward the demand for LGD exports are expected to revive in FY25, as demand for naturally mined diamonds may remain sluggish. This is attributed to its price point, environmental sustainability, and intensified competition from India against other leading LGD-producing nations.
Tanvi Shah, Director, CareEdge Analytics and Advisory said, “The LGD exports are expected to witness a revival with expected growth of 7-9% to reach ~US$1500-1530 million in FY25. Faced with ongoing geopolitical and economic disruptions globally, the gems & jewellery industry is relying on the rapidly growing LGD market to mitigate the effects of low demand for natural diamonds. Due to low cost of man-made diamond, domestic consumption and exports are expected to increase in this fiscal.”
*Perspective by Mr. Colin Shah, MD, Kama Jewelry on ‘Outlook for Lab Grown Diamond Exports for FY25’ basis CareEdge Report*
Commenting on the report Colin Shah, managing director, Kama Jewelry said “LGDs have been the talk of the town ever since consumers realised the cost-effectiveness and environment-friendly aspects of this product category. The demand for LGDs in domestic and international markets has been progressing upwards until FY23. The dampened sentiment during FY24 was owing to multiple factors that influence the global economic factors like the constant geo-political tensions, and volatility in price trends that have led to decline in overall exports. On the contrary, countries like Germany, UK, Italy and China saw a surge in exports during FY24 which may be attributed to G7 ban on Russian-origin diamonds.””While the downtrend has led a severe hit for the overall fondness towards LGDs, the way forward looks promising for revival of demand. This comes with a backdrop of a decline in natural diamond prices triggered due to weak purchasing power, which in turn sets the ground for LGD demand to flourish,” Shah said
India produces over three million lab-grown diamonds a year and accounts for 15% of the global production. At present, India is the second-largest producer of lab-grown diamonds, trailing behind China. Other than China and India, countries like the U.S., Singapore and Russia are also leading manufacturers of lab-grown diamonds. In 2022, the market for lab-grown diamond jewellery in India was valued at US$ 264.5 million. In 2023, the expected value of the domestic lab-grown diamond market is $300 million. The lab-grown diamond industry has faced its own set of challenges. For instance, the supply of lab grown diamonds has surged, leading to a significant drop in prices.
However, the India-UAE Comprehensive Economic Partnership Agreement(CEPA) will further boost the growth of this industry. For instance, Finance Minister Nirmala Sitharaman, in the Budget 2023-24, announced a reduction in basic customs duty on seeds used to manufacture LGD from 5% to NIL. This move was made to focus on the LGD exports from India among depleting natural diamond reserves. Besides, the depreciating rupee is likely to act as a cushion for this export-dependent industry.
Good quality lab-grown diamonds with qualified certification, produced from the developed equipment and process parameters, will attract more foreign consumers. Thereby, reviving the export business.Similar to the Cut and Polished Diamonds (CPD), the declining price of LGD during recent times has resulted fall in India’s exports of LGD to key export destinations. Exports of LGD have recorded a decline of 16.5% from US$ 1680.22 million in FY23 to US$ 1402.30 million in FY24.
During FY24, the USA, Hong Kong, and UAE collectively dominated India’s export for lab-grown diamonds, accounting for 90% of the total exports. The exports of LGD saw ~60% CAGR from FY16 to FY23, however from FY23 to FY24 there was a decline of 16.5% y-o-y. The exports to all other countries witnessed a decline except for countries like Germany, the UK, Italy and China showing significant export growth during FY24. The G7 ban on Russian-origin diamonds may be one of the reasons for this. The primary reasons behind the export decline are attributed to reduced prices of lab-grown diamonds, showing that volumes are intact, and prices are resulting in lower export value. The average price per carat for LGD is US$198.22 for 10MFY24 whereas the price of natural diamond per carat is US$4357 for 10MFY24.
