Surat's polishing industry in for a treat as lab-grown diamonds find favour

Of the roughly 8,000 polishing units in Gujarat city, 15% polish lab-grown diamonds exclusively

With global brands like Pandora launching their first lab-created diamond jewellery, the world’s largest diamond polishing hub at Surat has reason to cheer.

With decades-old infrastructure in place, international leadership in polishing natural diamonds and skilled manpower hungry for more work, Surat is gearing up to be the global hub for laboratory-created diamonds, too.

Unlike natural diamonds that are a limited resource and undergo stringent measures and long gestation before being mined and polished for use, lab-created diamonds can be developed at lower cost and faster.

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“Except for the way they are grown, which is through a machine or a reactor in a laboratory, lab-grown diamonds are similar to natural diamonds and have been recognised as bonafide by the US, the UK, Australia, and other markets. Since they can be grown with the same carat and quality as natural diamonds, their polishing is also entirely similar to the latter. It is here that Surat and India already enjoy a healthy lead globally,” said Vipul Shah, vice chairman of Gems and Jewellery Export Promotion Council (GJEPC).

At present, 25-30 per cent of diamond polishing units in Surat service lab-grown diamonds, with around 15 per cent of units dealing only in the lab-created commodity.

According to GJEPC data, polished lab-grown diamonds witnessed a growth of 105.58 per cent to Rs 2,499.95 crore ($325.45 million) in April and May, as against Rs 1,216.06 crore ($164.52 million) in April and May 2021.

It is estimated that nine out of 10 diamonds in the world are polished in Surat. Although the world is still waking up to lab-grown diamonds, in terms of polishing, Surat has taken rapid strides in the last 2-3 years.

According to Dinesh Navadia, regional chairman for Gujarat, GJEPC, of the roughly 7,000-8,000 diamond polishing units in Surat, the share of lab-grown diamond polishing used to be in single digits till 2019.

“On the one hand, historically, natural diamonds have continually faced supply crunch and are a depleting resource as hardly any new mines are coming up. On the other hand, rising prices coupled with the recent Russia-Ukraine war have impacted almost 30 per cent of natural rough diamonds supply this year. Hence, more are taking up lab-grown diamond polishing. But there are still some years to go till the industry reduces its dependency on natural diamonds,” said Navadia.

Lead in production

And it’s not just polishing, Surat has already begun taking the lead globally in terms of producing diamonds in laboratories, according to industry experts.

Diamonds are typically produced in two ways in laboratories — chemical vapour deposition (CVD) and high pressure high temperature (HPHT). It is in the former process that India leads globally.

Industry sources estimate that there are currently less than 10 growers in India with a combined capacity of 3,000 CVD reactors with each reactor carrying a capacity of churning out 175 carats per month, which is minuscule compared to the demand. As against a global natural rough diamonds market of $14-15 billion, the current market size of lab-grown diamonds stands at just $1.5 billion and is set to grow to $2 billion in 2022-23.

Meanwhile, the industry and the government are working on a policy to help boost investment in HPHT technology, in which China is currently the world leader. It is believed that the government is looking at offering subsidies similar to the technology upgradation fund scheme (TUFS) offered in the textile sector for setting up new CVD and HPHT machines.

According to Nimesh Mehta, founder and managing director Go Green Diamonds, one of the early bonafide lab diamond producers in India, it costs roughly Rs 1-1.50 crore to set up a diamond laboratory. Lab-grown diamonds tend to be priced anywhere between one-third and one-tenth of the price of natural diamonds.

“Theoretically, if a carat of natural diamond is worth $10,000, then the same carat of lab-grown diamond would be priced at $1,000,” said Mehta.

Also, barring the average 8-10 months it takes from ordering parts to starting production, the precious commodity can be grown in 21-45 days, unlike natural diamonds, which have longer gestation.

“But what India, especially Surat, has recognised early is that while the polishing industry has depended on the raw material to be largely imported in case of natural diamonds, lab-grown can solve the long-term availability issue,” Mehta said.

He added that natural diamonds are always in short supply and controlled by miners. “Due to limited availability and shortage of rough diamonds, units in Surat were always struggling and facing unemployment issues too. But with lab-grown diamond supply growing steadily, Surat has enough polishing units and will welcome as many polishing orders as they can get,” said Mehta.

Thanks to its early mover advantage, Surat already enjoys a 70 per cent share in lab-grown diamond supply. But other countries, led by China, are also preparing to scale up production.

Gaining sheen

• Global natural rough diamonds market estimated at $14-15 billion
• Global lab-grown diamonds market currently valued at $1.5-2 billion
• Lab-grown diamonds cost one-third to one-tenth as much as natural diamonds
• Lab-grown commodity share in diamond polishing in Surat up from single digits in 2019 to 20-25% in 2022