Lab-grown diamonds (LGD) are likely to become cheaper with the reduction of customs duty on LGD seeds to zero from 5 per cent in Budget 2023. Finance Minister Nirmala Sitharaman also promoted indigenous manufacturing in the emerging sector by providing research grants to an IIT for five years. “It will ensure India’s end-to-end world leadership in rough to finished lab-grown diamond and jewellery manufacturing. In addition to that, government has also accepted to have clear segregation customs codes for silver- and platinum- studded lab-grown jewellery for better differentiation and identification at consumer level,” said Vipul Shah, Chairman, Gem & Jewellery Export Promotion Council (GJEPC).
Lab-grown diamonds are grown inside a lab using cutting-edge technology that replicates the natural diamond growing process and the result is a man-made diamond. Lab-grown diamonds can be created by two processes, High Pressure High Temperature (HPHT), which is prevalent in China, and Chemical Vapor Deposition (CVD), which is commonly seen in the US and India.
GJEPC believes the LGD industry has the potential to employ 1 million people to process 150 million carats of lab-grown diamonds and achieve an export turnover of Rs 40,000 crore in the near future.
Currently, India contributes around 15 per cent of global production of lab-grown diamonds. Given India’s expertise in diamond polishing, it can position itself firmly in the lab-grown diamond sector too since the process of polishing both is similar.
Besides the jewellery industry, lab-grown diamonds are also used in computer chips, satellites, 5G networks, etc., as they can be used in extreme environments since they have the potential to operate at higher speeds while using less power than silicon-based chips.
India’s exports of polished lab-grown diamonds more than doubled (+105.63 per cent) to $1.3 billion from April 2021 to March 2022 compared to $636.25 million in FY21.
Disha Shah of DiAi Designs Jewellery, a lab-grown fine jewellery brand in India said: “Glad that the Government of India recognises the growing popularity and demand for lab-grown diamonds. The R&D grant to support production and sales and even the consideration of lab-grown diamonds within the Union Budget 2023 is a huge encouragement for the entire lab-grown industry. This reflects positively on the opportunities for imports and exports within this sector. With the import duties cut down, we can forecast an increase in demand leading to significant growth in sales, and the opportunity to take our Indian brands international.”
Commenting further, Shah said: “Another positive pro-growth move is that the conversion of physical gold into digital gold will not attract capital gains tax.”
GJEPC welcomed the move to increase the duty on articles (jewellery) of precious metals such as gold/silver and platinum from 20 per cent to 25 per cent. “Union Finance Minister has rationalised the import duty on silver by proposing to increase the import duty on silver dore, bars and articles to align them with that on gold and platinum. This will have a net effect of increase of around 5 per cent duty at import level for silver resulting in increase of price for silver products domestically,” said Shah.
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