Lab-Grown Diamond Exports Poised for Revival in FY25
SURAT, GUJARAT : After a recent slump, India’s lab-grown diamond (LGD) export sector is expected to witness a significant revival in the coming fiscal year (FY25), according to a report by...
SURAT, GUJARAT : After a recent slump, India’s lab-grown diamond (LGD) export sector is expected to witness a significant revival in the coming fiscal year (FY25), according to a report by CareEdge Advisory. The report forecasts a growth of 7-9%, pushing exports to a value range of approximately US$1500-1530 million.
This optimistic outlook comes amidst a challenging period for the industry. LGD exports experienced a substantial decline of around 16.5% year-on-year in FY24. While sales volume has continued to grow, plummeting prices have negatively impacted export figures. However, CareEdge Advisory believes a depreciating rupee will offer some relief to the industry.
Shifting Consumer Preferences Drive LGD Growth
Looking ahead, the demand for LGD exports is anticipated to rebound in FY25 due to several factors. Primarily, sluggish demand for mined diamonds is expected to persist. This can be attributed to factors like price competitiveness, environmental concerns surrounding natural diamond mining, and India’s intensified competition with other leading LGD producers.
“The LGD exports are expected to witness a revival with expected growth of 7-9% to reach ~US$1500-1530 million in FY25,” said Tanvi Shah, Director, CareEdge Analytics and Advisory. “Faced with ongoing geopolitical and economic disruptions globally, the gems & jewellery industry is relying on the rapidly growing LGD market to mitigate the effects of low demand for natural diamonds. Due to the lower cost of man-made diamonds, domestic consumption and exports are expected to increase in this fiscal,” she added.
India: A Leading Player in Lab-Grown Diamond Production
India is a powerhouse in the LGD industry, boasting annual production exceeding three million diamonds and accounting for 15% of global output. Currently, India stands as the second-largest producer globally, following China. Other major players include the US, Singapore, and Russia.
The domestic lab-grown diamond market in India has also witnessed impressive growth. The market value was estimated at US$264.5 million in 2022 and is projected to reach US$300 million in 2023.
Challenges and Opportunities for the Future
The LGD industry has faced headwinds like a surge in supply, leading to a significant drop in prices. However, recent developments like the India-UAE Comprehensive Economic Partnership Agreement (CEPA) are expected to bolster industry growth. Additionally, the Indian government’s move to reduce customs duty on seeds used in LGD manufacturing further incentivizes exports.
Reviving Exports Through Quality and Competitive Advantage
Similar to the situation with cut and polished diamonds (CPD), the decline in LGD prices has impacted exports to key destinations like the USA, Hong Kong, and the UAE, which collectively account for 90% of India’s LGD exports. However, exports to other countries like Germany, the UK, Italy, and China have shown promising growth, potentially due to the G7 ban on Russian diamonds.
Experts believe the primary reason behind the decline in export value is the reduced price per carat of LGDs, while sales volume remains strong. This highlights the need for a focus on quality and competitive advantage in the export market.
India’s Potential in the Lab-Grown Diamond Market
With over 6,000 machines dedicated to LGD production, India has steadily increased its production capacity. Production costs have also significantly decreased over the past decade and are expected to stabilize moving forward.
CareEdge Advisory emphasizes affordability, environmental sustainability, and near-identical properties to natural diamonds as key factors driving the revival of LGD demand, particularly in the 1-3 carat segment. This, coupled with rising gold and natural diamond prices, positions lab-grown diamond jewelry as an attractive and ethical alternative for consumers seeking value and conscious luxury.
