According to CareEdge Advisory, the Lab-grown Diamonds (LGDs) exports are expected to witness a revival in FY25, with exports expected to grow by 7-9% to reach a value of ~US$1500-1530 million.

LGD exports have been declining in recent time, and have seen around 16.5% decline y-o-y for FY24. While the sales volume of LGDs have been growing, the declining prices have impacted the exports. Nevertheless, the depreciating rupee is likely to act as a cushion for the industry, believes CareEdge Advisory.

Going forward the demand for LGD exports are expected to revive in FY25, as demand for naturally mined diamonds may remain sluggish. This is attributed to its price point, environmental sustainability, and intensified competition from India against other leading LGD-producing nations.

Tanvi Shah, Director, CareEdge Analytics and Advisory said, “The LGD exports are expected to witness a revival with expected growth of 7-9% to reach ~US$1500-1530 million in FY25. 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 low cost of man-made diamond, domestic consumption and exports are expected to increase in this fiscal.”

India produces over three million lab-grown diamonds a year and accounts for 15% of the global production. At present, India is the second-largest producer of lab-grown diamonds, trailing behind China. Other than China and India, countries like the U.S., Singapore and Russia are also leading manufacturers of lab-grown diamonds. In 2022, the market for lab-grown diamond jewellery in India was valued at US$ 264.5 million. In 2023, the expected value of the domestic lab-grown diamond market is $300 million.

The lab-grown diamond industry has faced its own set of challenges. For instance, the supply of lab-grown diamonds has surged, leading to a significant drop in prices. However, the India-UAE Comprehensive Economic Partnership Agreement (CEPA) will further boost the growth of this industry. For instance, Finance Minister Nirmala Sitharaman, in the Budget 2023-24, announced a reduction in basic customs duty on seeds used to manufacture LGD from 5% to NIL.

This move was made to focus on the LGD exports from India among depleting natural diamond reserves. Besides, the depreciating rupee is likely to act as a cushion for this export-dependent industry. Good quality lab-grown diamonds with qualified certification, produced from the developed equipment and process parameters, will attract more foreign consumers. Thereby, reviving the export business.

Similar to the Cut and Polished Diamonds (CPD), the declining price of LGD during recent times has resulted fall in India’s exports of LGD to key export destinations. Exports of LGD have recorded a decline of 16.5% from US$ 1680.22 million in FY23 to US$ 1402.30 million in FY24.