As natural diamond prices drop, lab-grown gems gain popularity, especially with the festive season driving demand.
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Surat, India – A City in Transition
Surat, the world’s diamond processing hub, is witnessing a significant transformation as lab-grown diamonds (LGDs) gain popularity over their natural counterparts. Known for polishing 90% of the world’s diamonds, the city has traditionally relied on diamonds imported from countries like Russia and Botswana. However, an increasing number of gems processed in Surat are now produced in high-tech laboratories within India itself.
Lab-grown diamonds, which are virtually identical to natural diamonds in appearance but are more affordable and environmentally friendly, are quickly reshaping the city’s diamond trade. This shift is driven in part by India’s government, which has promoted the industry as a means of reducing the country’s reliance on foreign suppliers.
Demand Surge Ahead of Diwali
As Diwali approaches, traders in Surat are reporting a surge in demand for lab-grown diamonds. With prices of natural diamonds having dropped by 30% since 2022, and lab-grown diamonds now available at a fraction of the price, consumers are opting for synthetic alternatives. Nagji Rawal, a diamond broker in Surat, says that most customers now ask for lab-grown diamonds due to their affordability. “Earlier, only the rich could afford diamonds, but now, even the average person can fulfill their dreams,” he says.
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Lab-grown diamonds cost about a third of what natural diamonds do, yet they are virtually indistinguishable from natural ones without specialized equipment. This has made them particularly attractive to budget-conscious consumers during the festive season. The Diwali festival, a time for gift-giving and celebratory purchases, has traditionally been a strong period for diamond sales, and the affordability of lab-grown gems is driving increased demand this year.
The Impact on Surat’s Diamond Workers
While lab-grown diamonds are creating new opportunities, they are also causing concern for many in Surat’s traditional diamond sector. Bhavesh Tank, vice president of Surat’s diamond workers’ union, notes that although lab-grown diamonds have provided employment during tough times, particularly during the supply disruptions caused by the Russia-Ukraine war, the oversupply of these gems is driving down wages.
Workers like Mahesh Singh, who has been polishing diamonds for 30 years, say their income has halved in recent months as prices have fallen. Unlike natural diamonds, some lab-grown diamonds are harder to polish, meaning workers are paid less for the same amount of work. Moreover, Tank reports that many laborers have complained of reduced wages and late payments, with some workers resorting to desperate measures.
Government Support and the Industry’s Future
The Indian government has responded to these challenges by providing incentives for the lab-grown diamond industry. In its 2023-2024 budget, the government eliminated a 5% customs duty on diamond seeds, the raw materials needed to produce lab-grown diamonds. A $29 million research grant has also been announced to help boost domestic production of these gems.
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Smit Patel, director of the Surat-based company Greenlab, sees this shift as part of India’s broader push toward self-reliance. “We can grow our own rough diamonds, cut and polish them here, and export them around the world,” he says, calling lab-grown diamonds the “pinnacle” of India’s self-reliance agenda.
Despite these efforts, some in the industry remain skeptical. Alpesh Shah, a trader who deals exclusively in natural diamonds, believes the overwhelming availability of lab-grown diamonds is hurting his business. “If everyone has a diamond, it will no longer be considered precious,” he warns.
Conclusion: A Divided Future
As demand for lab-grown diamonds rises, particularly during festive seasons like Diwali, Surat’s diamond industry is at a crossroads. While lab-grown diamonds offer a more affordable and ethical alternative to natural gems, the economic impact on workers and the long-term sustainability of the industry remain hotly debated. Whether natural diamonds will regain their former glory, or if lab-grown gems will continue to dominate, only time will tell.
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