The rising allure of lab-grown diamonds

Duchess of Sussex Meghan Markle’s ring features a conflict-free cushion cut diamond sourced from Botswana. Flanking this centerpiece, are two smaller lab-created diamonds that once belonged to Princess Diana. Pics/Getty Images

Adrija Majethia had her engagement ring picked out in 2017, years before she picked talent manager Nisarg Malde to be her fiancé. For their engagement in 2023, the couple who lives in Dadar Parsee Colony, chose lab-grown diamonds fitted to designs of their choice.

Chetna Valia had forever wanted to buy solitaires for her ears, and gift a pair to her daughter as well. This year, working within a budget, the Matunga-resident was able to buy a pair each, as well as rings to go with it - all studded with cultivated diamonds.

Pic/iStock

Rahul Roy had been "threatening to propose" to his partner Gauri Bhure for a while. The Bandra-resident finally "sealed" the deal with a man-made diamond five years ago while on holiday in Goa.

Are lab-grown diamonds (LGDs) pushing out old sparklers to steal the spotlight on ring fingers, ears and clavicles? Vantage Market Research valued the Indian LGD market at $2.61 billion (Rs 22,353 crore) in 2023, and projected it to grow to $8.31 billion (Rs 71,000 crore) by 2032. They were also identified as a major growth area in the 2023-24 Union Budget, with great potential for "Make in India" to become more self-reliant across the entire diamond value chain. A series of supportive measures recommended include reduction in import duty of LGD seeds, as well as research and development grant to an IIT for five years.

What does this foretell for the luxury market? Experts predict a few years of churn, after which the market will settle into two types of gem buyers - luxury and fast-fashion.

What's likely to influence buyers in the near future is the Consumer Affairs Ministry's announcement in November that it is mulling on regulations to ensure that lab-grown diamonds can only be marketed as "synthetic diamonds", to prevent confusion among buyers.

Matunga-resident Chetna Valia fulfilled her long-cherished dream of owning solitaires this year with lab diamonds. She could fit in a pair of earrings and a ring for herself and her daughter within a budget. Pic/Ashish Raje

Sliding into the rows upon rows of jewellery showrooms in Bandra West, are small boutiques proudly announcing lab-grown diamonds, with an eye on buyers who are increasingly financially and ethically conscious. Yet five years ago, after Roy first read about cultivated diamonds in a news report and decided to source one for his proposal to Bhure, he had research online extensively until he found Fiona Solitaires in Bandra. "Gauri is from the social sector, so I knew she would appreciate this." says the 45-year-old, "It was my way of saying, ‘Here you go, you social-responsibility person'."

The human eye cannot discriminate between LGD and natural diamonds; you'd need to take a peek through the specialised machines that can detect nitrogen atoms - mined ones have a higher concentration of these atoms, and in a different molecular composition than LGDs.

Lavanya Mohan, Keyur Mehta and Ricky Vasandani

That they are in no way inferior to their natural cousins - but at 15 to 20 per cent of their cost - is what finally convinced to Valia, a 64-year-old homemaker, to buy LGDs. "I already have a natural diamond set which has sentimental value, and spoke to many family jewellers, who assured me one could not tell the difference," she says, "A single one-carat natural solitaire could come up to R8 lakh. For much less, I was able to buy myself and my daughter a pair, as well as a ring each. I want to make bangles next; lab-grown diamonds are fulfilling the aspiration of the middle-class to own solitaires."

Currently, retail prices for lab-grown diamonds generally range from '65,000 to '85,000 per carat, as per Solitario, an LGD brand. "This pricing has remained stable over time," says Ricky Vasandani, CEO and co-Founder. Not crafted by geological factors such as pressure, time and actual geology, LGDs can be grown to specific clarity, colour and size. So you can buy a large diamond for a fraction of the cost. And you can make as many of them as you like, so price is not driven by scarcity.
Though not the driving factor, the low price of LGDs became another validation in Roy's choice of ring ahead of his proposal. "What I didn't know then is that Gauri is very careful about spending," he says. "She finds the ‘engagement ring formula' that it should cost X times your monthly salary, absurd."

Adrija Majethia and Nisarg Malde chose lab diamonds for their engagement rings mainly due to the price point

Diamonds can be a woman's best friend for investment and liquidity, but only as long as they are natural. The question of buy-back value is a very important one to Indian buyers. While the mined gem may not be as good an investment as gold, most retail stores offer current market price - with a 10 to 15 per cent cut - for their own pieces.

Exchange is usually at 100 per cent market value, says Prajwal Jain, whose family has been in the diamond business for a 100 years and owns several stores in Kandivli and Borivli. "Most people buy natural diamonds only from trusted family jewellers like us," he says. "We assure them quality, certification and buyback."

The underpinning for this is the trust factor. For buyers keen on testing their astrological compliance with the "energy" of the stone, whether it "suits" them and brings fortune, it's a major plus point if the seller is willing to exchange or refund it. Traditionally, if you've bonded with your family jeweller over generations, they will lend you the intended stone to sleep with under your pillow, to see what dreams it brings.

LGD are not as good of an investment, but neither are they a complete waste of money. "We realise our customers not only seek beautiful jewellery, but also peace of mind when making such significant investments," says Solitario CEO Vasandani over email, "We offer 90 per cent lifetime cash back on the invoice value. Additionally, our 100 per cent lifetime exchange policy on invoice value further allows customers to upgrade their purchase or switch styles without losing value."

A cursory glance at the exchange and buy-back policies of most LGD players shows that like Vasandani, they know the importance trust and connect plays in the Indian sona bazaar.

The depreciation in worth - buyback is at invoice value, not the market rate - doesn't seem to be an issue for some LGD buyers, for now at least. Given its sentimental value, Majethia never intends to sell her ring, and neither does Roy's wife, Bhure.

"As Kutchhis," says 28-year-old Majethia, "we don't invest in diamonds anyway. They depreciate in value the minute you walk out of the store. I chose lab-grown for my engagement ring because it was more cost-efficient and I was more set on the design than the gem." The 28-year-old originally wanted emeralds - a gem both her and Malde, 33, prefer - but is too soft for daily wear. "I work with dogs all day," says the canine behaviourist.

Valia, who owns both natural diamonds and LGDs, says, "If I had to resell my new [lab-grown] diamonds, I will at least get value for the gold."

This vast gap of invoice value versus market price will eventually cleave buyers, though. Keyur Mehta, a top-level executive for one of the world's largest diamond suppliers, says that after the current churn [a shortfall in mined diamonds caused by international affairs, such as a ban on Russian diamonds], the natural diamond market could settle into the status of luxury watches. "When quartz watches came in the 1970s," he explains, "prices of hand-wound watches fell for a while. Then Swiss companies began selling them at a higher price, as a luxury good, which is what the market is now."

Key selling factors for LGDs are the ethics, though concerns are being raised about the carbon emissions from the processes of production: CVD (chemical vapour deposition) and HPHT (high pressure high temperature). Mehta, an executive with a diamond MNC, admits that while companies have to adhere to the labour, production and environmental policies of the country they operate in, the fact that natural diamonds can only be extracted from the earth means one cannot bypass the disruptive mining process.

LGDs bypass unethical practices such child labour, unfair pay, and human rights violations. On the other hand, some of the sheen of natural diamonds has been tarnished by controversy over "conflict or blood diamonds", which are mined in war zones and been linked to funding of civil wars, terrorism and dictatorship in Angola, Liberia, Sierra Leone, the Democratic Republic of Congo, and Ivory Coast.

"The environmental impact of lab-grown diamonds is significantly lower than that of mined diamonds," says Vasandani, "Customers can wear their diamonds with pride, knowing they are making a responsible choice that supports ethical practices." Natural diamond retailers Mehta and Jain both admit that their customers are rarely aware of, or care, about the ethicality of the stone.

It certainly mattered to Bhure though. "I resisted the idea of marriage for a long time for what it signified in a patriarchal, conservative structure," says the CSR head of a tech company. "That Rahul got me a lab-grown diamond showed that he ‘got me'." Working as she does on ground in non-urban areas, Bhure does not wear her engagement ring every day.

Chartered Accountant Lavanya Mohan, who decodes personal finance for women on social media, says eventually it will all come down to personal preference. "Natural diamonds are only an investment when they are extremely large, say 10 carats and upwards," she explains, "or when they are of cultural or historical significance such as a Golconda diamond or belonging to a Mughal emperor, or have a rare quality such as coloured diamonds."

"The savings come in larger sizes," she says of cultivated diamonds, "where one can get solitaires of one or two carats at a fraction of the rate, at cut and clarity we would have never expected before."

The caveat is that diamonds may be bought as investment, but they are rarely treated with that sort of solvency. Shruti Mathur teaches at a primary school in Delhi and only found out about LGDs last year when she asked the price of a dainty pair of diamond baalis her friend was wearing. "It was only about R90,000," she says.

The 47-year-old owns a simple solitaire ring gifted by her husband for a landmark birthday. Seven years later, she enquired at a store about its price and was told its value had appreciated by R17,000. "Even though I don't intend to sell it," she says, "it makes me feel good to know how much its price had increased."

Her grandmother, too, opted for natural stones when she gifted her five grandchildren, including Mathur's offspring, identical diamond sets as inheritance.

Would Mathur buy LGDs for daily wear? "Frankly, I'm not sure," she says, admitting the ethics would also not be a big draw. It's not like LDGs cost small money either, so if she were spending that much, she'd like to know it's growing in price.

And what if she were to buy heritage pieces for her descendants? "It would have to be natural," she says without needing to think about it. "It would make me happy to know the diamonds could help them [if sold]."

Rs 65K
Cost of a one-carat lab-grown solitaire

Rs 7LAKH
Cost of a one-carat natural diamond

Rs 22K CRORE
Valuation of Indian LGD market in 2023

Rs 71K CRORE
Estimated market size by 2032
' Source: Vantage Market Research and retailers