The Indian gems and jewellery industry which contributes around 7% to the country’s overall GDP employs over 5 million people. The sector is nuanced, dominated by independent (family-owned) entities on the one hand, chain stores on the other and a gamut of manufacturers who have their own specialty when it comes to manufacturing jewellery, cut and polished diamonds as well as gemstones to both domestic as well as international markets.
Lab-grown diamonds (LGDs) are bound to become cheaper with the decrease in customs duty on LGD seeds to NIL from 5 per cent. Finance Minister Nirmala Sitharaman also promoted indigenous manufacturing in the emerging sector by providing research grants to an IIT for five years. "To encourage indigenous production of LGD seeds and machines and to reduce import dependency, a research and development grant will be provided to one of the IITs for five years," said the Finance Minister.
“The budget is extremely favourable towards the lab-grown sector. India is one of the leading exporters of lab-grown diamonds, and the policy changes announced will further make India number 1 when it comes to lab-grown diamonds. The recommendations will foster employment opportunity in this sector as well as facilitate buying state-of-the-art LGD machinery and technology at competitive rates,” said Vipul Shah, Chairman, GJEPC.
“This budget is a neutral one for our sector, no positives or negatives. Of course, the impetus given to boost technology and digital fronts will be good for both natural and lab-grown industries,” said Anoop Mehta, President, Bharat Diamond Bourse.
Speaking in favour of the recommendations, Pooja Sheth Madhavan, MD & Founder, Limelight, said, “The government for the first time has spoken of the identity of lab grown diamonds by addressing them as (NOT ARTIFICIAL OR SYNTHETIC) but eco-friendly and bearing the same properties as natural diamonds. This awareness created by the government in itself is going to instil huge amount of consumer confidence in lab grown diamonds and we will be a seeing a huge shift in consumer preference towards LGDs in India. The budget is likely to further solidify and grow the entire value chain in the LGD sector and more LGDs will now be available at the retail level.”
However, some retailers are still unclear about the impact this might have on natural diamond players. “The government has also placed impetus on promoting Lab grown diamonds as it is seen as a green initiative through the reduction in basic customs duty on seeds required for lab grown diamonds. What kind of impact this will have on consumers over all as well as the natural diamond industry remains to be seen,” said Dr. Saurabh Gadgil, Chairman and Managing Director, PNG Jewellers.
“The announcement of funds for lab-grown diamonds is also a cause of worry for jewellers who deal in large scale natural diamonds,” said Varghese Alukka of Josalukkas Group.
Commending the government’s vision of making India a technology-driven and knowledge-based economy, Nilesh Chhabria, COO, Finestar Jewellery and Diamonds Private Ltd., said, “The gross exports of polished lab-grown diamonds saw a growth of over 60% in 2022 and that number will get a boost with today’s budget. The provisions acknowledging the potential of LGDs are a positive step for the gem & jewellery industry. I must add that while LDGs are promising, Natural Diamonds continue to stand strong. With no significant advantages for Natural Diamonds, the budget did leave us hoping for some benefits there.”
Commenting on the undeterred value on natural diamonds in the minds of consumers, Amit Pratihari, Vice President, De Beers Forevermark, said, “The overall budget has a positive sentiment. In fact, under the new tax regime, the budget has made room for more disposable income and purchasing power of consumers will increase. For natural diamonds, we’ve seen an encouraging trend over the past few months where consumers are purchasing items which hold meaning and value. Natural diamonds continue to be sought after due to their inherent preciousness. Pricing has also remained steady, and we are optimistic it will become stronger. As customers continue to value what is natural and genuine, diamonds will always be in demand.”
Parag Shah, Director, KISNA Diamond and Gold Jewellery is of the opinion that the steps taken by the government towards LGDs will be good for the fashion jewellery segment. He says, “This is a step in the right direction. We see the impetus on lab grown diamonds as an overall positive for fashion accessories segment and industrial usage. Natural diamonds hold their charm for the jewellery segment given the high resale and emotional values associated with it.”
From logistics, infrastructure and tourism point of view, the reforms have been quite progressive. “The announcement to develop 50 new airports and helipads, once ready will make secure logistics significantly faster and safer. The huge infrastructure investment bumped up to 10,000cr by 33% will have a positive cascading effect on all industries, provide more employment and thereby increase circulation of money in the economy. The reduction in Import duty on Seeds for Lab grown diamond manufacturing will accelerate India’s rise to a global manufacturing leader in the entire diamond industry, lab grown as well as natural.
Other ease of doing business initiatives like making PAN the universal company identifier, reducing compliances & more commissioners for faster dispute resolution are highly positive for improvement in day-to-day functioning for businesses. For the logistics & jewellery industries, we look forward to implementation of this budget positively,” said Bhavik Chinai, Group CEO, BVC Logistics.