Kolkata: Large jewellery chains such as Kalyan Jewellers, Tanishq, Malabar Gold & Diamonds, Joyalukkas and Senco Gold are staying away from lab-grown diamonds (LGDs) citing low demand and an aversion to mixing them with natural stones at counters.
Nonetheless, the buzz over such stones – much cheaper than natural diamonds and indistinguishable from them – is getting louder, with higher sales in markets such as the US and government stimulus budgeted in India.
Top retailers still feel the local market is not yet ready to accept LGDs like the US, as artificial diamonds are popularly considered fashion jewellery and not an asset with resale value.
Ramesh Kalyanaraman, executive director of the listed Kalyan Jewellers, said enquiries were minimal and the future of lab-grown diamonds unclear. “Until demand and supply align, we have no immediate plans to pursue this,” he said.
“Consumers are not asking for LGDs at our stores. We are still not witnessing any craze,” said Suvankar Sen, chief executive of Senco, which is also a listed company.
These top brands operate 150-200 stores each. Additionally, major stores do not want to keep LGD jewellery along with natural diamonds – fearing confusion among customers.
“If at all we enter the category, which may not happen soon, it will be under a separate brand and at separate stores,” said Sen.
Kalyanaraman also pointed to fluctuating international and domestic prices of such seeded stones, saying the chain would focus on stable value propositions. Other major jewellers concur, and are seen as unlikely to enter the category in the next four to five years.
Cost Cut
According to Gem Jewellery Export Promotion Council provisional data for the current fiscal (till February), gross exports of polished LGDs slipped 18.5% year-on-year to $1,278 million. Shipments of cut and polished natural diamonds for the same period fell a steeper 28%. There is a rise in demand for LGDs globally on the back of economic headwinds following the Ukraine war, rising interest rates denting spending power, and G7 sanctions on Russian diamonds.
Back home, the price differential is significant. At the wholesale level, a carat of LGD costs Rs 20,000-25,000. For retail, this could go up by anything between 30% to 100%. Compared with that, one carat of natural diamond costs Rs 3-5.5 lakh in retail.
“Even with this price difference, there’s hardly any demand from our customers,” said Sen of Senco.
Baby George, chief executive at Joyalukkas, echoed this sentiment. “We have to wait and see how the category develops,” he said. “We have no plans as of now to sell LGDs in our stores.”
Indian customers do seek value for money, but they also want the precious tag that’s attached to fine jewellery made with natural diamonds, Rajiv Popley, director of Mumbai-based Popley & Sons, pointed out. “In case of LGDs, it’s missing,” he said.
Another Facet
Synthetic diamond manufacturers and retailers, however, say things are changing.
Limelight Diamonds founder and managing director Pooja Sheth Madhavan said, “Consumer confidence is on the rise in India and over 50 LGD jewellery outlets have opened in the last six months in the metros alone. We now have 10 stores in India. We witnessed threefold growth in our brand sales in FY24, compared with FY23.”
She said 36% of engagement rings in the US in 2023 were studded with lab-grown diamonds, compared with 17% in 2022.
The segment is getting a fillip from the Centre too. The Budget 2023 terms lab-grown diamonds an emerging sector, and incentivises it in the form of a research grant and lower customs duty on seeds, which is expected to bring down the cost of production.
Popley also factored in relatively lower consumer awareness in the market on LGDs. “In the coming years, LGD may grow as a separate category, which is good for the overall gems and jewellery market,” he said.
