Major jewellery retailers like Kalyan Jewellers, Tanishq, Malabar Gold & Diamonds, Joyalukkas, and Senco Gold are refraining from incorporating lab-grown diamonds (LGDs) into their collections due to low consumer demand and a reluctance to blend them with natural stones at their displays.
However, the excitement surrounding these stones, which are considerably cheaper than natural diamonds and virtually indistinguishable from them, is growing. This is evidenced by increased sales in markets like the US and the allocation of government stimulus funds in India.
Major retailers continue to believe that the local market is not prepared to embrace LGDs in the same way as the US. Artificial diamonds are commonly viewed as fashion jewellery rather than an investment with resale value.
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Ramesh Kalyanaraman, the executive director of Kalyan Jewellers, stated that there has been minimal interest and the future of lab-grown diamonds remains uncertain. “Until demand and supply match up, we currently have no plans to venture into this,” he commented.
“Customers aren’t inquiring about LGDs in our stores. We haven’t seen any significant demand,” stated Suvankar Sen, the CEO of Senco, a publicly listed company.
Each of these leading brands operates between 150 to 200 stores. Furthermore, prominent retailers are hesitant to stock LGD jewellery alongside natural diamonds due to concerns about confusing their customers.
“If at all we enter this segment, which may not happen soon, it will likely be under an independent brand and at separate stores,” stated Sen. John McCain.
Kalyanaraman also highlighted the fluctuating international and domestic prices of these lab-grown stones, indicating that the chain would prioritize stable value propositions. Other major jewellers share this sentiment and are unlikely to venture into this category for the next four to five years.
According to provisional data from the Gem Jewellery Export Promotion Council for the current fiscal year (up to February), gross exports of polished LGDs decreased by 18.5% year-on-year to $1,278 million. In comparison, shipments of cut and polished natural diamonds for the same period saw a more significant decline of 28%. The global demand for LGDs is increasing due to economic challenges resulting from the Ukraine conflict, rising interest rates affecting purchasing power, and G7 sanctions on Russian diamonds.
Domestically, there is a substantial price difference. At the wholesale level, a carat of LGD is priced between INR 20,000-25,000. For retail, this could increase by anywhere from 30% to 100%. In contrast, one carat of natural diamond retails for INR 3-5.5 lakh.
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“Despite this price difference, we’re seeing minimal demand from our customers,” commented Sen from Senco.
Joyalukkas CEO Baby George had the same opinion. “We need to wait and observe how the category progresses,” he stated. “As of right now, we have no plans to sell LGDs in our stores.”
Indian customers do look for value for money, but they also desire the prestige associated with fine jewellery made with natural diamonds, highlighted Rajiv Popley, director of Mumbai-based Popley & Sons. “With LGDs, that prestige is lacking,” he noted.
However, synthetic diamond manufacturers and retailers argue that the landscape is evolving.
Pooja Sheth Madhavan, the founder and managing director of Limelight Diamonds, commented, “Consumer confidence in India is increasing, and more than 50 LGD jewellery outlets have opened in just the past six months in major cities. We currently operate 10 stores in India. Our brand sales in FY24 saw a threefold increase compared to FY23.”
She mentioned that in 2023, 36% of engagement rings in the US were set with lab-grown diamonds, up from 17% in 2022.
The segment is also receiving support from the government. The 2023 Budget recognizes lab-grown diamonds as an emerging sector and provides incentives such as a research grant and reduced customs duty on seeds, aiming to reduce production costs.
Popley also highlighted the relatively low consumer awareness in the market regarding LGDs. “In the upcoming years, LGDs may evolve into a distinct category, which could benefit the overall gems and jewellery market,” he commented.
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