Lab-Grown Diamond Outlook: Price Declines Aren’t a Deterrent

Some Indian manufacturers think the potential in this young, evolving market outweighs current price concerns.

Rows of chemical vapor deposition reactors used to grow diamonds. The lab-grown diamond industry is growing in India despite the steep decline in prices for the man-made stones.

Mumbai—It was a process that took India’s natural diamond industry more than three decades to accomplish—the transformation from smaller, dispersed manufacturing units to massive, centralized complexes with state-of-the-art equipment.

The country’s emerging lab-grown diamond industry has managed to accomplish the same in a just a few years.

At the apex of the new segment of the industry are factories at mega-scale, employing thousands of skilled artisans and with turnover totaling many millions of carats.

Consider companies like Greenlab Diamonds, Lumex or Kira; some of the networks they have created are mind-boggling.

Greenlab has more than 1,000 reactors, 2,500 skilled employees and an annual production capacity of 2 million carats.

Lumex, which describes itself as an agile marketing and distribution company that can scale its operations as per market conditions, has access to a network of suppliers that can offer up to 200,000 carats of polished to the market.

And Kira, which is just a few months old, is staking claim to the title of currently being the largest grower in the world, with a 700,000-square-foot facility in Surat employing 2,500 workers.

Large swaths of the industry are adopting so-called green energy, such as solar or wind power, and are focused on some of the now popular sustainable development goals—women’s empowerment, energy-efficient processes, and recycling of materials to the extent possible, to name a few.

And most, if not all, of those at the helm are young professionals who have roots in families with a long history in the natural diamond business.

It seems difficult to believe this transformation is taking place against the backdrop of a major dip in price.

In his September “State of the Diamond Market Report,” industry analyst Paul Zimnisky observed, “As of Q3 2023, a sampling of 1- to 3-carat lab-diamonds offered at retail are priced at an average 80 percent discount to that of equivalent-quality natural diamonds.”

He pointed out that the average amount spent on engagement rings in the United States (about $5,500 to $6,500) in 2023 could buy either a 1-carat round natural diamond or a 2.75-carat lab grown one.

Five years ago, the cost of a 1-carat natural diamond was equivalent to only a 1.4-carat lab-grown diamond.

Data provided by Edahn Golan, another analyst who tracks trends in retail sales of diamond jewelry in the U.S., shows lab-grown diamond prices are down 28 percent year-over-year in August.

He reports, “The price gap between natural diamonds and lab-grown diamonds is wide and growing. In January 2020, the retail price of a 1-carat round lab-grown diamond was 35 percent less than a comparable natural diamond … Currently, the price gap is 76 percent even as the price of natural diamonds is declining.”

The gap at wholesale is even wider, more than a 90 percent discount, which is 10 percent higher than it was a couple years ago, observers say.

According to figures from the Gem & Jewellery Export Promotion Council, lab-grown polished diamond exports are down 27 percent year-over-year for the April-August 2023 period dropping to $562.5 million from $765.9 million a year ago, though industry sources say that in carat terms, exports are at prior-year levels.