Revival of Lab-Grown Diamond Exports: Projections and Potential
Lab-grown diamond exports are set to experience a revival in the fiscal year 2025, with projections from CareEdge Advisory indicating a robust growth of 7-9%. This resurgence follows a downturn in FY24, marked by a significant 16.5% year-on-year decline in exports to around US$1402.30 million. Despite a rise in sales volume, plummeting prices had hindered export performance during this period. However, CareEdge Advisory remains optimistic about the future, citing the potential cushioning effect of the depreciating rupee on the industry.
Looking forward, the rebound in lab-grown diamond exports in FY25 is expected to be driven by several factors. Chief among these is the sluggish demand for naturally mined diamonds, influenced by pricing dynamics, environmental concerns, and heightened competition from India compared to other major lab-grown diamond-producing countries.
Tanvi Shah, Director at CareEdge Analytics and Advisory, anticipates, “LGD exports are poised for a recovery, with an estimated growth of 7-9% to reach approximately US$1500-1530 million in FY25. Amid ongoing global geopolitical and economic disruptions, the gems and jewellery industry is banking on the rapidly expanding lab-grown diamond market to counteract the weak demand for natural diamonds. With the lower cost of man-made diamonds, both domestic consumption and exports are expected to rise in this fiscal year.”
India, with an annual production exceeding three million lab-grown diamonds and contributing 15% to global output, ranks as the second-largest producer globally, after China. Alongside India and China, countries such as the U.S., Singapore, and Russia have emerged as significant players in lab-grown diamond manufacturing. In 2022, India’s domestic market for lab-grown diamond jewellery was valued at US$264.5 million, with expectations to surpass US$300 million by 2023.
Nevertheless, the lab-grown diamond sector faces challenges, including a surge in supply leading to price erosion. Nonetheless, initiatives like the India-UAE Comprehensive Economic Partnership Agreement (CEPA) and reductions in customs duties are expected to drive industry growth. Additionally, the depreciating rupee is anticipated to boost exports, particularly for high-quality lab-grown diamonds with proper certification.
Affordability, environmental sustainability, and similarity to natural diamonds are expected to fuel demand for lab-grown diamonds, particularly in the 1-3 carat segment. As consumers seek alternatives amidst rising gold and natural diamond prices, lab-grown diamond-studded jewellery emerges as an attractive option, aligning with evolving consumer preferences for value and sustainability in precious jewellery.
Conclusion:
As lab-grown diamonds gain traction for their affordability and sustainability, the industry anticipates a promising rebound in exports.
