Gujarat Hardlook: Lab Grown Diamonds hold out ray of hope in Surat

“In a day, we prepare around two lab grown diamonds, depending on the size of diamonds, its shape, and number of facets. Thus we earn more on the LGD. The consequences can be extreme if the natural diamond gets lost by the diamond cutter. While here (in case of LGDs), the scene is quite different — we work without tension with a free hand, no strain and even productivity increases,” he explains.

While natural diamonds can take billions of years to form, it has become much easier to manufacture and own diamonds that are lab grown. With the growth of lab grown diamonds in the international market, many natural diamond manufacturers in Surat have started expanding manufacturing of LGD on small scales.

Of nearly 45,000 big small and medium diamond factories in Surat, the lab grown diamonds, which were fewer around five years ago, have now grown exponentially and many natural diamond players have started lab grown cutting and polishing units in the same factory, portioning both the units.

Impact of global events

The natural diamond sector was badly hit after the Russia-Ukraine War started in 2022 when the United States imposed sanctions on the Russian government-owned miner and distributor of diamonds, Alrosa, in April 2022. Alrosa mines 28% of the world’s natural diamonds. Two years later, the European Union, backed by G7 countries, banned diamonds of Russian origin.

These events directly hit jobs in Surat where over seven lakh people are employed with the diamond industry. With the source of mined diamonds crunched, factories in Surat either cut down to a five-day week, or cut salaries of their workforce, in a bid to survive the recession that came along.

In such a scenario, the synthetic diamond came as a ray of hope with demand for products using greener processes.

Greener pastures

Among pioneers in growing green diamonds, Green Lab employs over 6,500 workers and uses solar and wind energy for manufacturing roughs. In November, the firm started its first jewellery retail shop in Delhi. It exports to the US, the United Kingdom, Middle East, China, and Australia, among other countries. Green Lab made a 7.5 carat eco-friendly synthetic diamond that PM Modi gifted to the US first lady Jill during his visit to the US in June 2023. The diamond was themed on “75 years of Azadi ka Amrit Mahotsav” (75 years of India’s independence).

This particular stone was made in two months, says Smit Patel, Director, Green Lab. “Before giving the LGD, the US officials had visited our factory and they took each and every detail about how the diamonds are being made and the process used for growing. The US team also visited our factory where the diamonds are cut and polished,” he says.

The firm started out as a natural diamond company — founded by Manjibhai Patel, originally a diamond cutter — by the name of M. Kantilal Exports. His sons shut down the diamond business till they came across LGDs, Manjibhai’s grandson Smit.

A firm at Surat Diamond Bourse that manufactures lab grown diamonds. (Express)

“It was in 2017 when my father Mukesh Patel came across diamonds grown by the Chemical Vapour Deposition (CVD) process. Our entire family did research on it; and later, we started the LGD factory at Varachha in 2018. We started importing the machinery used for growing diamonds. Later, we started a cutting and polishing factory, and after a couple of years, we started diamond studded jewellery”.

Making a synthetic diamond

There are two processes to make synthetic diamonds — one is the CVD and the other is the High Pressure High Temperature (HPHT) method.

The HPHT method is cheaper and more common. As the name suggests, this method requires extremely heavy presses that can produce up to 730,000 psi of pressure under extremely high temperatures (at least 1500 celsius). Usually, graphite is used as the “diamond seed” and when subjected to these extreme conditions, the relatively inexpensive form of carbon turns into one of the most expensive carbon forms. This mimics the natural diamond formation process.

The lab grown diamond consumers and natural diamond consumers are different from each other. People have started understanding the LGDs slowly and mostly the first-time buyers are attracted to LGDs.
Vipul Shah
National Chairman, GJEPC

According to Smit, “Generally, LGD players are using CVD technology — a small diamond slice is placed in a chamber where it is exposed to carbon rich gas and extremely high temperature. After several days, the carbon gas ionises and sticks to the original diamond slice, which leads to the diamond to grow in size and creates new diamond material.”

The CVD process also allows adding colour to diamonds by introducing other gases.

Changing Times

While China is a leader in the LGD market, India contributes at least 15%. In the 2023-24 budget, Finance Minister Nirmala Sitharaman announced a reduction in customs duty on the diamond seed used to manufacture LGD and also announced a grant to the Indian Institute of Technologies researching them.

On firms adapting to the changing times and accommodating units for LGDs, Surat Diamond Association (SDA) president Jagdish Khunt says, “Surat is globally known as the hub of cutting and polishing of mined diamonds. Since the last one and half years, the industry has faced a huge problem of recession as there is no demand of polished diamonds in the international market due to the ongoing Russia-Ukraine war, Israel-Palestine war, sanctions on Russian goods by the US and European markets, slowdown in Chinese economy, and other factors. Unable to survive in the unfavourable market conditions, the mined diamond manufacturers had since last one and half years diversified into the lab-grow diamond sector. They run separate units for natural as well as LGD in Surat. The purpose is to take care of their diamond workers, who work in both segments and even they have to keep their image in the market that their factory is not shut.”

Gujarat Lab Grown Diamond Association president Babubhai Vaghani further shares, “There are 1,100 members registered with us in Surat. Over 80% of diamond factory owners and traders who were involved in the natural diamond segment have started expanding their business to LGD. With the recession in the natural diamond segment, the industry players are seeing opportunities in LGD, with no investment and even the raw materials are cheap and easily accessible. Seeing the speedy growth of LGD, we are hoping that in the coming years, 50% of the Indian jewellery market share will be of the LGD and it will also increase employment.”

As per data from the Gems and Jewellery Export Promotion Council (GJEPC), the gross export of LGD in October was 1.27% higher in US Dollar terms (2.25% by Rupee terms) compared to October 2023, the exports valued at Rs 1160.7 crore compared to Rs 1135.16 crore last October . However, it is yet to beat the natural di mond market that grew by 11.32% by the USD (12.39% by the Rupee) the same month this year with the gross export pegged at Rs 11,795.83 crore as compared to Rs 10,495.06 crore in October 2023.

Vipul Shah, National Chairman, GJEPC, says, “The lab grown diamond consumers and natural diamond consumers are different from each other. People have started understanding the LGD slowly and mostly the first-time buyers are attracted to LGD. The first-time buyers who cannot afford diamonds are now buying the LGD jewellery. The US is a major player in both — natural and LGD jewellery sector. Natural diamonds have their own niche as people who are looking for appreciation, for value, it will always remain. People who are looking for fun-wear or fashion-wear may prefer LGD. While in natural diamonds, branding is seen where people will find value for money.”

He further adds, “There are many more players in the diamond industry, involved in trading and manufacturing who are doing natural and LGD together, but with separate set-ups in manufacturing and trading. In trading, they have a separate company while in manufacturing (cutting and polishing), they have a separate set up where an entire floor in the building would be dedicated to LGD.”

Shah says that the LGD sector supports the employment demand. “There is a grave difference in demand and supply chain in the diamond industry. As a result of this, people have cut short production and opened the factories late (after vacations). Due to the depreciation in demand and supply, the price fluctuation will be there. The LGD is complementing natural diamonds in terms of production as there is poor demand for natural diamonds. Both these sectors are complementing each other rather than competing with each other”, says Shah.

The skill required in polishing a mined diamond and a lab-grown one is the same as the machine. In both cases, the worker sits on the emery wheel to polish and finish.

Nagjibhai Sakariya (66), owner of diamond exporter HVK International Limited and vice president of Surat Diamond Bourse, shares, “We have been into the diamond industry for the last 45 years, and we have not seen such a recession in the industry in our entire life. In my natural diamond factory, there are over 5,000 diamond workers. With unfavourable conditions in the natural industry, we started another LGD factory (using CVD process) with 500 diamond cutters. We export LGD and natural diamonds to the USA, China, Middle East, Hong Kong, Japan etc. Presently there is a demand for LGD in the USA and the market is growing exponentially in India, as there is a demand coming from North Eastern states. We are hopeful that in the next three months, the demand for natural diamond will start picking up its momentum.”

‘The raw materials of natural diamonds are quite expensive than LGD. The labour charges are the same. Presently, we are running a unit with 500 diamond polishers in LGD and in the coming days, seeing the market conditions of LGD, we may increase our production. The production of natural diamonds dipped by 60%. We are maintaining production and hope that in the next few months the natural diamond industry will gain its lost momentum,” he adds.