Kolkata: Indian consumers are rushing to buy natural diamonds as prices have fallen about 30 per cent to Rs 3.5 lakh per carat from the peak of Rs 5 lakh in 2022, said industry executives.
On the contrary, gold prices have surged more than 60 per cent during this period and silver 76%. On Thursday, gold was trading at Rs 86,541 per 10 gm and silver at Rs 97,181 per kg in the physical market, according to the India Bullion & Jewellers Association (IBJA).
Increasing demand for lab-grown diamonds in the US has brought down natural diamond prices, according to industry executives. Besides, no offtake from China, one of the biggest buyers of Indian natural diamonds, has put pressure on the prices of natural diamonds. Exports of cut and polished diamonds fell 17.73 per cent year-on-year to $10,772.8 million in the first ten months of 2024-25.
Uncut natural diamonds enter India through trading centres such as Antwerp, Dubai and Israel and are cut and polished in Surat, the diamond city of the country. Then these diamonds are exported to the overseas markets.
“Lab-grown diamonds (LGDs) have made their way into the US markets in a big way, which is one of the reasons why the demand for natural diamonds has slowed in the US. Also, the price difference between natural diamonds and lab-grown diamonds, which was 40%, has widened further and LGDs are now cheaper by 80 per cent compared to natural diamonds. However, subsequently, two different categories will emerge and they will not compete with each other. Natural diamond is rare and its appeal will remain among discerning buyers,” said Vipul Shah, former chairman of the Gem & Jewellery Export Promotion Council.
Currently, the domestic natural diamonds market is only about $8.7 billion or about a tenth of the $85-billion gems and jewellery industry and there is ample room for expansion.
Jewellery manufacturers have tweaked their production strategy to cater to the rising diamond-studded jewellery demand. Mangesh Chauhan, managing director of Mumbai-based listed jewellery manufacturer Sky Gold, which supplies jewellery to Malabar Gold & Diamonds, Senco Gold & Diamonds and Aditya Birla Jewellery, said, “Consumers are leaning towards diamond jewellery, not just for its appeal but also because it uses less gold, helping them manage higher gold prices. We have adapted to this change by adjusting our inventory and production strategies. Our focus has shifted towards lighter ticket sizes – from Rs 45,000-Rs 60,000. This has allowed us to boost our production volume to 350 kg of jewellery per month”
The demand for natural diamond jewellery has seen traction in southern India, where gold has traditionally remained a preferred choice for consumers. Baby George, CEO of Joy Alukkas, said “The demand for diamond studded jewellery has seen an uptick in FY25 in the southern markets. Earlier, our stores would keep diamond jewellery worth Rs 12 crore. Now it has shot up to Rs 15 crore as consumers are trying their hands on diamond jewellery.” Joy Alukkas has 101 stores across the country.
