Exports of Lab-Grown Diamonds (LGDs) are poised for a resurgence in the fiscal year 2025, anticipating a robust growth of 7-9%, as projected by CareEdge Advisory. This revival comes on the heels of a recent downturn, with FY24 witnessing a significant 16.5% year-on-year decline in LGD exports, totalling approximately US$1402.30 million. While the volume of LGD sales has seen an uptick, plummeting prices have impeded export figures. Despite these challenges, CareEdge Advisory remains optimistic, citing the depreciating rupee as a potential buffer for the industry.
Looking ahead, the demand for LGD exports is anticipated to rebound in FY25, buoyed by several factors. Foremost among them is the sluggish demand for naturally mined diamonds, attributed to pricing dynamics, environmental considerations, and intensified competition from India vis-à-vis other leading LGD-producing nations.
Tanvi Shah, Director at CareEdge Analytics and Advisory, forecasts, “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, boasting an annual production of over three million lab-grown diamonds and accounting for 15% of global output, stands as the second-largest producer worldwide, trailing only behind China. Beyond India and China, countries like the U.S., Singapore, and Russia have also emerged as prominent players in LGD manufacturing. In 2022, India's domestic market for lab-grown diamond jewellery was valued at US$264.5 million, with expectations to reach US$300 million by 2023.
However, the lab-grown diamond sector faces its own set of challenges, including a surge in supply leading to price erosion. Nevertheless, initiatives like the India-UAE Comprehensive Economic Partnership Agreement (CEPA) and reductions in customs duties are anticipated to propel industry growth. Moreover, the depreciating rupee is expected to bolster exports, especially for high-quality lab-grown diamonds with proper certification.
Affordability, environmental sustainability, and similarity to natural diamonds are poised to drive demand for LGDs, particularly in the 1-3 carat segment. As consumers seek alternatives amidst escalating 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.