In India’s ‘Diamond City’, a hard push for lab-grown diamonds after Ukraine war

AHMEDABAD: A sharp decline in the import of rough diamond pieces to be processed by Surat’s diamond industry after Russia invaded Ukraine has led to renewed efforts to encourage the use of lab-grown diamonds, people aware of the matter said.

Gems and Jewellery Export Promotion Council (GJEPC) regional chairman Dinesh Navadiya said the demand for lab-grown diamonds had been on the rise “but this is the perfect time to promote this industry”. The council leaders met Union commerce minister Piyush Goyal on May 17 to seek the government’s support.

“The popularity of lab-grown diamonds has been driven by a huge spurt in demand in the US in recent times.  We have demanded that special parks to manufacture lab-grown diamonds be promoted and they be included in the production-linked incentive scheme of the Central government,” said Navadiya.

Lab-grown diamonds are made in a lab using cutting-edge technology that replicates the natural diamond growing process and the result is a man-made diamond that is chemically, physically, and optically the same as those found beneath the earth’s surface.

They can be created by two processes – High-Pressure High Temperature (HPHT) which is used in China and Chemical Vapor Deposition (CVD) which is used in USA and India.

“Held a meeting with the manufacturers of lab-grown diamonds to deliberate on ways to promote their products in India. Lab-grown diamonds provide a huge opportunity for India to consolidate its position as the diamond manufacturing hub of the world,” minister Goyal said in a tweet after his meeting with GJEPC representatives on May 17.

The diamond industry of Surat, where over 85-90% of the world’s roughs are processed, has seen its imports decline by one-third after the Russia-Ukraine war began, according to people aware of the matter.

The supplies from Alrosa, the Russian government-controlled mining company, were cut off due to sanctions by G-7 nations following the Ukraine war. As a result, diamond polishing companies in Surat have announced summer holidays for an extended period of time to avoid lay-offs.

The industry employs close to 8 lakh people and is a major contributor to India’s gems and jewellery exports of USD 39 billion for 2021-22, according to data by India’s Gems and Jewellery Export Promotion Council (GJEPC).

India contributes around 15% to the global production of lab-grown diamonds for which it is presently self-sufficient. Given India’s expertise in diamond polishing, it is imperative that India positions itself firmly in the lab-grown diamond sector too since the process of polishing is similar, said Navadiya.

“The lab-grown diamonds are ethically sourced, so there is no question of availing Kimberely Process certification being 100% conflict-free diamonds. Besides jewellery industry, lab-grown diamonds are also used in semiconductors, satellites and 5G networks. This industry is 100% export-oriented and supports the Prime Minister’s mission of Aatmanirbhar Bharat and Make in India,” said Dr Snehal Patel, promoter of Bhanderi Lab Grown Diamonds, one of the leading manufacturers in Surat for man-made diamonds.

India’s exports of polished lab-grown diamonds were USD 274 million, USD 473 million, USD 637 million and USD 1,293 million during 2018-19, 2019-20, 2020-21 and 2020-21 respectively. Annual growth during the same periods was 72%, 35% and 103%, according to GJEPC.

India exports polished lab-grown diamonds to the USA, Hongkong, UAE, Israel, and Belgium. The USA accounts for around 67% of India’s exports followed by Hongkong with a share of 14%.

These diamonds are 70% cheaper as compared to mined diamonds, according to Navadiya of GJEPC.

Many small factories in Surat and towns of Saurashtra are facing supply crunches of roughs due to the war.

“During summer the industry declares vacation for its workers but this time there is going to be an extended vacation due to supply issues. Presently, there is about 40% cut in the supplies. In such times, the lab grown diamonds are finding their place in the market and gaining popularity,” said Mathurbhai Savani, owner of a diamond firm in Surat and director of Surat Diamond Bourse.

Courtesy: Hindustan Times