The revolution underway in India’s diamond industry

  • By Priti Gupta in Mumbai & Ben Morris in London
  • Business reporters

image source, Chintan Suhagiya


Chintan Suhagiya inspects a lab-grown diamond

Chintan Suhagiya is only 26 but already has seven years of experience working in India’s diamond industry.

In the beginning, he transported diamonds around his company based in the world’s diamond-cutting capital of Surat in western India.

But over the years he learned to inspect diamonds and now judges their quality using special equipment.

His career has been transformed by a seismic shift in the diamond industry. Until two years ago, all the diamonds he inspected were natural – pulled from the ground by diamond mines.

Now he works with diamonds grown in special machines, a part of the industry that barely existed 10 years ago but has seen explosive growth thanks to improved technology.

Lab-grown diamonds (LGDs) look so much like natural diamonds that even experts have to look closely.

“Nothing with the naked eye can tell the difference between natural and lab-grown diamonds,” says Mr. Suhagiya.

“The natural diamonds and lab-grown diamonds are so similar that once, even after a lab test, there was confusion about the origin of a diamond. The diamond had to be tested twice to make sure it was a lab-grown one. ” he says.

Natural diamonds are formed by great heat and pressure deep underground, and since the 1950s scientists have tried to recreate this process above ground – resulting in two techniques.

image source, Bandari Lab diamonds


Another fresh batch – rough laboratory diamonds before they are cut and polished

The High Pressure High Temperature (HPHT) system is where a diamond seed is surrounded by pure graphite (a type of carbon) and exposed to temperatures of around 1,500 C and pressurized to approximately 1.5 million pounds per second. square inch in a chamber.

The second process is called Chemical Vapor Deposition (CVD) and involves putting the seed in a sealed chamber filled with carbon-rich gas and heating to around 800C. The gas sticks to the seed and builds up a diamond atom by atom.

Although these techniques emerged in the late 20th century, it is only in the last 10 years that the process has been refined so that lab-grown diamonds can be produced at the right price and quality to be sold as jewelry.

“In the beginning it was more difficult because there were very few machines and very few researchers who could do it… over the last seven years, as more expertise became available in the market, we’ve seen really big growth. ” says Olya Linde, a Zurich-based partner with Bain and Company’s Natural Resources practice.

Ms Linde says that since the early 2000s, the cost of producing lab-grown diamonds has halved every four years.

These days, a one carat diamond – a popular size and common in engagement rings – manufactured in a laboratory would be about 20% cheaper than its naturally formed counterpart.

These falling costs have attracted entrepreneurs.

Snehal Dungarni is the CEO of Bhanderi Lab Grown Diamonds, which he started in 2013. It uses the CVD process to make diamonds.

“We are able to monitor the growth of the diamond, atom by atom, at the highest degree of purity.

“By comparison, they are cost and time efficient and save mining and extraction costs – making them humane and environmentally friendly,” he says.

India has long played a key role in the diamond industry – it is estimated that nine out of 10 of the world’s diamonds are polished in Surat.

Now the government wants India to become a key player in the lab-grown diamond business.

image source, Bandari Lab diamonds


The lab-grown diamond business has thrived over the past 10 years

The nation already produces about three million lab-grown diamonds a year, accounting for 15% of global production, according to the Department of Trade and Industry. China is the second major producer with a similar market share.

In January, in an effort to further strengthen the sector, the Indian government abolished a 5% tax on imported diamond seeds and announced funding to help India develop its own diamond seed production.

“As global prosperity increases, the demand for diamonds will increase,” says Vipul Bansal, joint secretary in the Ministry of Commerce.

With 30 years in the traditional diamond industry, Hari Krishna Exports is India’s leading producer of cut and polished diamonds.

But this year, director Ghanshyambhai Dholakia founded a lab-grown diamond company.

“In the next three to four years, we will see massive demand and growth in lab-grown diamonds,” he predicts.

But will the new business take market share from his traditional diamond business?

“Both natural and lab-grown diamonds cater to different consumer segments. And there is demand in both segments,” says Mr Dholakia.

“LGD has opened up a new consumer market – the middle class in India – who have money and will be able to afford a lab-grown diamond,” he says.

However, it may take some time for that market to take off in India. Most LGDs manufactured in India are exported to the US.

“The Indian market is still not ready, so as a council we are promoting exhibitions and events to create a place for LGDs. In three to four years, India will be ready,” said Shashikant Dalichand Shah, chairman of Lab Grown Diamond and Jewelery Promotion Council.

image source, Dholakia diamonds


Lab-grown diamonds have opened up a whole new market for gemstones

Shah is chairman of Nine Diam, a diamond trading company founded by his great-grandfather.

He agrees that manufactured diamonds will have a very different place in the market than those that have been mined.

“A diamond made in a lab or a factory is an artificial diamond. So a buyer who knows and loves diamonds will always go for a real diamond,” he says.

He adds that the relative scarcity of natural diamonds means they will hold their value better.

“Laboratory-grown diamonds lose their value after purchase, whereas in a natural diamond, 50% of the value is retained after purchase,” he says.

While that may be the case, lab-grown diamonds offer jewelry designers greater flexibility.

“Natural diamonds are so expensive that you always want to maximize the diamond from the natural stone. Lab-grown diamonds you can design however you want,” says Ms. Linde.

“We’ve seen jewelry where they’ve cut holes in the diamonds so they dangle and sparkle more.”

Back in Surat, Chintan Suhagiya is happy about his move into the LGD industry and believes many others will find work in the sector.

“The laboratory diamond industry is going to provide jobs to millions. This will be an unstoppable industry,” he says.

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