The Lab-Grown Diamond (LGD) industry is primed for a notable resurgence in the fiscal year 2025, with an anticipated robust growth rate of 7-9%, as per projections from CareEdge Advisory. This revival follows a recent downturn, with FY24 witnessing a significant year-on-year decline of 16.5% in LGD exports, totaling approximately US$1402.30 million. Despite an uptick in LGD sales volume, declining prices have posed challenges to export figures. Nevertheless, CareEdge Advisory maintains an optimistic outlook, citing the depreciating rupee as a potential mitigating factor for the industry.
Looking forward, the demand for LGD exports is expected to rebound in FY25, driven by several factors. Foremost among them is the sluggish demand for naturally mined diamonds, attributed to pricing dynamics, environmental concerns, and heightened competition from India compared to other leading LGD-producing nations.
Tanvi Shah, Director at CareEdge Analytics and Advisory, predicts, “LGD exports are poised to witness a revival with an anticipated growth of 7-9% to reach ~US$1500-1530 million in FY25. Given the ongoing geopolitical and economic disruptions globally, the gems & jewelry industry is banking on the rapidly expanding LGD market to counteract the effects of reduced demand for natural diamonds. With the cost-effectiveness of lab-grown diamonds, both domestic consumption and exports are expected to rise in this fiscal year.”
India, with an annual production of over three million lab-grown diamonds, accounts for 15% of global output, positioning itself as the second-largest producer worldwide, trailing only behind China. Besides India and China, countries such as the U.S., Singapore, and Russia have also emerged as significant players in LGD manufacturing. In 2022, India’s domestic market for lab-grown diamond jewelry was valued at US$264.5 million, with projections 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 expected to drive industry growth. Moreover, the depreciating rupee is likely to bolster 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 LGDs, particularly in the 1-3 carat segment. As consumers seek alternatives amidst rising gold and natural diamond prices, lab-grown diamond-studded jewelry emerges as an attractive option, aligning with evolving consumer preferences for value and sustainability in precious jewelry.
