The recent surge in gold prices has led to a shift in consumer behaviour towards lab-grown diamond (LGD) studded jewellery, which is more pocket-friendly, said LGD manufacturers and retailers. In addition to this, the value-seeking consumer is also attracted to LGD studded jewellery as it offers a proposition of more gold proportion in the same budget.
All the major metropolitan areas are showing a recent increase in demand, growing at an estimated rate of at least 15%. In particular, metros are demonstrating significant interest. “Additionally, second-tier cities, like Pune with its tech-population, are showing even greater interest. Consumers in these areas are well-educated and well-informed, and they recognize the excellent value for money that LGD offers,” said Mukesh Shah, Founder of Ashth, a lab-grown diamond firm.
“For example, within a budget of Rs 5 lakhs, a consumer is likely to get a 1 carat solitaire natural diamond ring studded in only 3 gms of gold. Whereas in the LGD category, in the same budget of Rs 5 lakhs, the consumer is able to pick up a 1 carat LGD solitaire diamond ring plus three additional LGD jewellery pieces, leaving the customer with at least four times more gold proportion of 12 gms in the same budget. This leaves the consumer with a much better value proposition of more gold and more diamonds in the same budget,” said Pooja Sheth Madhavan, founder and managing director of Limelight Lab Grown Diamonds.India’s current total production is estimated to be close to 16 million carats of rough LGDs.
Shah said that a typical diamond of decent quality, such as those graded SI1 or SI2, costs significantly less than a flawless diamond. A D-flawless diamond might be priced at around 8 to 10 lakh INR per carat. In contrast, a natural diamond of similar quality (SI1 or SI2) would cost approximately Rs 4 to 5 lakh per carat. However, a lab-grown diamond of the same quality can be priced between Rs 20,000 to 25,000 per carat, he added.
Commenting on the price fall of LGDs, Shah said “LGDs are technologically developed. Initially, production is rising, but the demand has not matched up yet. People have invested in more machinery in anticipation of future demand, which is expected to catch up. Ultimately, demand will outgrow production. However, right now, there’s a mismatch because production is higher than demand, and the sector isn’t well-organized. Some major players are entering the market simply because they see others doing it, but they lack a clear strategy for their products. Unlike the natural diamond market, which had regulatory bodies to control marketing and stabilize prices, this market lacks such regulation. 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 stabilize or start to rise as demand catches up with production.”
Disha Shah, Founder and Designer, DiAi Designs said In India, the past three years have seen rapid growth in the demand for LGDs with a 6-8% increase in 2023.
She added that prices of diamonds overall, natural or lab-grown have dropped. There have been a lot of ups and downs in the prices of lab-grown diamonds since our inception in 2018. This is primarily because of the demand and supply adjustments. Since supply is unlimited with lab-grown diamonds many believe the prices may drop further.
“However, we believe that demand is also increasing proportionally and there will soon be a minimum threshold beyond which prices wouldn’t decrease further,” she added.
“Any further decline in LGD prices will lead to severe losses for LGD growers & manufacturers and will not be sustainable. The decline in LGD prices in FY-24 simply erased supernormal profits and led to normalisation of profits across the value chain in the industry. This normalisation has also significantly increased the machinery payback period creating a huge barrier for entrants in growing LGDs leading to quality and price control in the hands of credible growers,” Madhavan said.
