The Indian diamond market is looking at a big opportunity to add a new shiny feather to its already glittering cap.
India is positioning itself as the world’s largest producer and exporter of lab-grown diamonds (LGDs), leveraging a significant drop in prices and undercutting global competitors with more affordable production methods, ToI reported on August 5. With prices falling from $355 per carat in 2022-23 to around $179 in 2023-24, international firms are struggling to stay afloat, leading to bankruptcies and suspended operations. Meanwhile, Indian manufacturers are ramping up production, exporting 7.81 million carats in 2023-24, despite a decline in value to $1,402.44 million, stated Yagnesh Bharat Mehta in a report.
The sharp decline in LGD prices has hit several international companies hard. Notably, WD LGD, the largest LGD maker in the US, went bankrupt last year. Similarly, De Beers halted its LGD production for jewelry in May, and French firm Diam Concept entered receivership in July.
Indian companies are capitalizing on their inherent cost advantages, including lower expenses for growing, cutting, polishing, and jewelry manufacturing. Dinesh Navadiya, chairman of the Indian Diamond Institute, explained that Indian firms can sustain lower profits thanks to lower production costs. “But with dropping profits, it proves difficult for them to meet the expenses in their region of operation. In India, the production costs are much lower; hence we can manage with lower profits as well,” Navadiya said.
Vallabh Lakhani, a leading LGD manufacturer, highlighted the competitive landscape. “It’s true that Indian firms are giving tough competition globally. While some foreign firms are still in the race with better technology, India too has close competition from China in smaller diamonds, and it may toughen if they succeed in manufacturing big (more than one carat) diamonds,” he said.
Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council (GJEPC), also emphasized India’s strategic advantages. “While some international players have scaled back or exited the market, it’s essential to consider the broader context. India’s emergence as a global LGD manufacturing hub has been phenomenal. Our country’s diamond expertise, strong infrastructure, skilled workforce, and cost-effective operations have positioned us as a preferred destination for LGD production,” Shah stated.
Babu Vaghani, president of the LGD Association, echoed similar sentiments. “Indian LGD industry can give tough competition since we grow our diamonds, we already have the world’s best cutting and polishing infrastructure, and we are also doing well in jewellery manufacturing. We already have a marketing network to sell our products globally,” Vaghani said.
Rajni Chanchad, another LGD maker, pointed out the favorable conditions for jewelry manufacturing in India. “We have a better level-playing field for jewellery manufacturing,” Chanchad noted.
Insiders attribute the falling prices of LGDs to rising production in India, making it difficult for firms in other countries to stay profitable. While some companies continue to operate with advanced technology, the competition remains fierce. With China posing a significant challenge in the production of smaller diamonds, the market dynamics could shift further if they succeed in producing larger stones over one carat.
India’s rapid rise in the LGD market demonstrates its capabilities and strengths across the diamond supply chain, from production to global distribution. As international competitors retrench, India’s position as a leading LGD hub is becoming increasingly secure.
