Nearly four lakh workers engaged in cutting and polishing of lab-grown diamonds (LGD) in Surat are facing delays in getting their wages and uncertainties about their jobs, with a fall in the prices of these man-made gemstones affecting the revenue of the units employing them.
As LGD prices are falling and export demand is not picking up as expected, wages are getting delayed by 20 days every month, according to the workers’ union.
Exports fell in value in 2023 but grew in volume, industry executives said. Last calendar year, exports of polished LGDs from India increased more than 50% in volume terms to 6.45 million carats, compared with 4.28 million carats in 2022. This year, volume growth too has slowed down. More than volume, value is falling which is a matter of concern. In 2024, value of lab-grown diamonds has fallen 45% compared with calendar 2023.
India can produce 16 million carats of LGDs annually.
“Workers in the LGD industry are facing trouble over wages. Wages are being delayed as the LGD manufacturers say prices of LGD are falling rapidly and exports are not picking up the way they had been projected,” Diamond Workers Union of Gujarat president Ramesh Zilariya said. “The workers fear that there might be job loss if prices do not pick up.”
Nearly 10 lakh workers are engaged in diamond trade in Surat, Zilariya said. “Of them 40% are engaged in LGD cutting and polishing. There are now 6,000 LGD reactors in Surat, churning out 16 million carats of LGDs.”
Cutting and polishing units in Surat process nine out of every 10 diamonds found in the world. Many workers started working in LGD units after western sanctions on Russian-origin diamonds resulted in a fall in exports of natural diamonds.
In a recent report, Paul Zimnisky, a well-known diamond industry analyst, said LGDs were currently sold at a 90% discount to the prices of natural diamonds, compared with a 10% difference in 2015. Zimnisky estimates sales growth in lab-grown diamonds to slow to as low as a single digit this year, down from the 20%-30% when these synthetic diamonds were at the peak of their popularity.
Mukesh Shah, founder of Ashth, which cuts and polishes LGDs, said: “A natural diamond of the most popular quality like SL1 or SL2 would cost Rs 4-5 lakh per carat. However, a lab-grown diamond of the same quality can be priced between Rs 20,000 and Rs 25,000 per carat.”
The price fall has become a major concern for the LGD segment that had expanded capacity in recent years, though the manufacturers expect demand to eventually pick up.
“Initially, production was rising, but the demand had not matched up. People have invested in more machinery in anticipation of future demand … Ultimately, demand will outgrow production. However, right now, there’s a mismatch because production is higher than demand,” Shah said. “Some major players are entering the market simply because they see others doing it, but they lack a clear strategy for their products.”
While the natural diamond market has regulatory bodies to control marketing and stabilise prices, this market lacks regulation, he said. As a result, there are many players, both big and small, leading to a significant drop in prices. “However, I believe the prices have now reached a low point and may stabilise or start to rise as demand catches up with production,” he added.
Disha Shah, founder of DiAi Designs, said prices of diamonds overall, natural or lab-grown, have dropped. “Since supply is unlimited with lab-grown diamonds, many believe the prices may drop further,” she said.
