Synthetic Sparkles: These Startups are Offering Affordable and Sustainable Diamond Options Lab grown diamond are deemed to provide 90 percent savings compared to earth-mined diamonds. The unethical practices associated with it such as slavery, underpaid, and underage workers, and a means to fund rebel groups and warlords have caused the mineral to be looked down upon
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In April, an X user made a post hoping women to side with him, "Getting your girl a lab diamond engagement/wedding ring is insanity." The reality was far from what he expected. Thousands of users, mostly women, responded stating "They are indistinguishable from each other," "Not crazier than a blood diamond," and "Dude. It's carbon." They say a diamond is a woman's best friend, indeed they'll know what they want the best.
BETTER THAN MINED:
According to the Federal Trade Commission, diamonds are formed of pure carbon crystallized in the isometric cubic system, and other materials such as nitrogen and inclusions, small pieces of foreign objects. Majority of diamonds are not 100 per cent pure carbon. Since natural Earth-mined diamonds are formed deep under earth's surface over billions of years, it is rare and precious, pumping up its monetary value. The technology behind lab grown diamonds (LGD) dates back to the 1950s but wasn't available on the market until as recent as the early 2010s. LGD takes approximately 6 to 10 weeks to be developed in a laboratory. Additionally, the unethical practices associated with mined diamonds has led to a rise in the sustainable alternative. To put this in perspective, one Carat of G-VS2 GIA Certified mined diamond costs USD 4,000 while the grown alternative costs USD 1,200. Other factors which make it a preferred choice include the same value at a lower cost, gives space for making other investments, and the potential of appreciation in value.
EMERGENCE OF STARTUPS:
India ranked No. 1 in global diamond exports with a market share of 26.5 per cent, worth USD 86.75B in 2022. In contrast, the country held 29 per cent share when it came to LGD and synthetic stones in 2019-20 with exports worth USD 6.48B. The exports of cut & polished (worked) lab grown diamonds stood at USD 1,387.33M in April-December 2022 according to the Directorate General of Commercial Intelligence and Statistics. This uptick in demand has paved the way for startups and founders to enter the space.
According to Tracxn, a market research firm, there are 11 dedicated startups in the sustainable-synthetic diamond segment. "We saw here an opportunity for someone to own a diamond solitaire at a fraction of the cost while being far more environmentally friendly and zero compromise on quality. One can get 100% identical products at 1/10th the price while saving the environment – a win-win-win model that could potentially change the future of the industry," shares Darayus Mehta, Co-Founder, True Diamond. The startup specializes in 100 per cent environmentally friendly alternatives to controversial diamond mining with diamond rings starting lowest at INR 8,500. It is deemed to provide 90 percent savings compared to earth-mined diamonds. The unethical practices associated with it such as slavery, underpaid, and underage workers, and a means to fund rebel groups and warlords has seen the mineral to be looked down upon.
Parag Agrawal of Fiona Diamonds notes that Indian consumers love LGD for Engagement Rings, "Couples who are getting engaged love the fact that these are conflict free and blood free diamonds. Engagement rings can be very personal and aspirational for a bride." Notably, 36 per cent of engagement rings in the US in 2023 were studded with LGD, compared with 17 per cent in 2022. Vidita Kochar, Co-Founder, Jewelbox said, "I feel accessibility is a bigger factor than sustainability in India. However, Gen Alpha, Gen Z and Millennials are woke about ethical fashion and sustainability so the day is not far when sustainability will become mainstream and a major decision driver."
Rohit Vadithela co-founded Vai Ra as an LGD startup to disrupt the traditional diamond industry and promote a more sustainable and transparent approach to jewellery production. He feels that the advancements in technology have made it possible to create LGD that are virtually indistinguishable from mined diamonds in terms of quality and appearance while significantly reducing production costs. Pooja Madhavan, Founder and MD, Limelight Diamonds adds, "LGD production involves heavy capital investment in technology as well as installation of renewable sources of energy either through wind or solar. As a result, they can never become extremely cheap."
THE GOVERNMENT PUSH:
In June 2023, during United States of America's President Joe Biden and First Lady Jill Biden visit to India, PM Narendra Modi presented the couple with multiple gifts, including a 7.5 carat synthetic green diamond. This aligns with India's push for becoming a global leader in producing the synthetic alternative. It was reported to have produced just 0.028 grams of Co2 per carat, which are about 100,000 times less emissions per carat than the production of an average mined one.
In the Union Budget of 2023, finance minister Nirmala Sitharaman announced the decision to reduce customs duty on seeds used in LGD courtesy of the influx of new participants in the diamond space. Additionally, a five-year research grant was announced for IIT-Madras to encourage the indigenous production of LGD machinery, seeds and recipes.
"The government's push for indigenous production and reduced customs duty aims to lower production costs and promote domestic growth in the lab-grown diamond industry," Vadithela adds. According to LGD Trade, there are atleast 80 lab grown diamond suppliers in India. Surat is deemed as the hub of diamond cutting and polishing and is responsible for 90% of the world's diamonds. In February this year, Gujarat's finance minister Kanubhai Desai announced INR seven crore for small and medium scale industries and synthetic diamond development.
Greenlab Diamonds, Limelight Lab Grown Diamonds, and Cupid Diamonds are the three major Surat-based companies powering India's ambition to excel in the international LGD market. Between 2019 and 2022, the exports from India tripled in value, with Smit Patel, Director, Greenlab Diamond believing it to be the future. "It's the same product, it's the same chemical, the same optical properties," he earlier shared with the media. Mehta believes that India is going very aggressively to try and own the entire supply chain.
HESITATION PERSISTS:
According to the Gem & Jewellery Export Promotion Council, the LGD export declined by 26.26 per cent during the April-September 2023 period. The unpredictability in the naturally mined diamond market can be largely credited to the unstable global economy, leading to lower disposable incomes. The fall in exports of LGDs can be attributed to several key factors such as rapid expansion of LGD production facilities leading to a downward price pressure, entry of new players led to the decline in export value attributed to price instability, and global recession. India lab grown diamond jewellery sales grew at 10.6% CAGR from 2018 to 2021.
While players like GIVA and ORRA have entered the lab grown diamond segment, experienced players feel there is still limited demand which is intercepting their entry. Kalyan Jewellers, Tanishq, Malabar Gold & Diamonds, Joyalukkas and Senco Gold have stayed away from LGD citing low demand. They still feel the Indian market is not yet ready to accept LGDs like the US and due to lack of awareness, people tend to see LGD as fashion jewellery.
CREATING AWARENESS:
So, what are startups doing to bust myths and promote LGD? "Most of our marketing campaigns focus on educating people about lab-grown diamonds, its benefits to the environment, how to choose the ideal diamond, 4 Cs of diamonds, etc," shares Kochar.
THE FUTURE:
The production volume of mined diamonds in India totaled over 13 thousand carats in the fiscal year 2021. "Post-Covid, the prices of naturally mined diamonds have gone up because of mining, labor, and supply chain-related issues. It is likely to continue as the global economic and social crisis continues. This, in turn, has led to an increased demand for lab-grown diamonds that can be mass-produced efficiently, leading to lower prices and greater accessibility," shares Dr. Apoorva Ranjan Sharma, Co-founder, and Managing Director, Venture Catalysts, and investor in Fiona. Parag Agrawal feels that jewellery with LGD are a perfect fit for the changing lifestyles, "LGD are all about Solitaires designs. With Natural diamond pricing such designs were never possible to make in this price segment."
"These diamonds are expected to become more mainstream in the coming few years with effective marketing campaign and more credible players entering the market thus boosting consumer confidence," Sharma further shares.
The global Lab Grown Diamonds market is expected to touch USD 39301.2 million by 2028 according to a report from Research Reports World. Future Market Insights shares that between 2023 and 2033, demand for LGD in India will surge at 14.8 per cent CAGR.
(With inputs from Minakshi Sangwan, Junior Writer)
