Local overproduction and high influx of imported diamonds cause drastic fall in LGD prices locally: GTRI 

The report points out that despite India’s production overcapacity, the country continues to import large volumes of lab-grown diamonds, worsening the problem of oversupply and further bringing the prices down 

MUMBAI: Adequate policy measures need to be put in place in order to curb cheap imports of lab grown diamonds (LGD) which has led to sharp decline in prices of LGDs in the local Indian market by as much as 65 percent, according to a report by the GTRI (Global Trade and Research Initiative). The adequate policy measures required at the moment are issuance of clear guidelines for LGD labeling and certification and imposition of quality control orders on diamond imports, the report mentioned. 

The GTRI report points out that despite India’s production overcapacity, the country continues to import large volumes of lab-grown diamonds, worsening the problem of oversupply and further bringing the prices down. “This situation, coupled with a lack of regulation, has led to a decline in consumer confidence, creating a challenging environment for domestic manufacturers,” it said. 

“The industry faces several challenges, including falling prices, intensifying competition both from local and imports, and the lack of clear regulatory frameworks. These issues pose potential risks to the sustained growth and profitability of India’s lab-grown diamond sector,” GTRI founder Ajay Srivastava was quoted as saying. 

Srivastava also said that the number of units producing lab-grown diamonds in India has increased to 10,000 units, leading to an oversupply and tougher competition. He also said that it is easy to replace natural diamonds with lab-grown ones in jewellery with many small stones to save costs. 

According to various estimates, global prices of lab diamonds crashed by 30-60 per cent in 2023 and is expected to continue to decline in 2024 increasing competition for Indian players. This is attributed mostly to over-supply and rise in competition. 

To address these challenges faced by the Indian lab-grown diamond industry, the GTRI report has suggested that the government should set clear and consistent rules to standardise quality, certification, and market practices. This will reduce uncertainty and ensure fairness in the industry.  

“The Ministry of Consumer Affairs should create guidelines to clearly label and certify lab-grown diamonds in jewellery, and sales invoices should clearly state if the jewellery they sell include lab-grown diamonds,” the report further stated.  

The report has also proposed that India should consider issuing a Quality Control Order to check quality of imports and also to invest in research and development (R&D) to improve production processes, reduce costs, enhance quality of lab-grown diamonds is also important. 

“This could include collaborations between industry players, academic institutions, and government agencies to drive innovation and ensure that India remains at the forefront of the global lab-grown diamond industry,” the report recommended. 

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