Lab-grown diamonds (LGDs) are gaining traction beyond India’s major metropolitan markets, with Tier-2 and Tier-3 cities emerging as an important demand segment, according to recent reports by The Economic Times and Whalesbook.
Industry estimates cited by Whalesbook indicate that LGDs account for nearly 10% of India’s diamond market, estimated at around ₹80,000 crore. The report attributes the expansion to the significant price difference between lab-grown and natural diamonds, along with increasing gold prices.
A premium lab-grown diamond currently costs around ₹50,000–₹80,000 per carat, compared with approximately ₹2 lakh–₹3.5 lakh for a comparable natural diamond, according to the report. The price differential is attracting aspirational consumers, particularly those in the 25–45 age group.
The rise in gold prices is also influencing jewellery purchasing decisions, with consumers looking to manage overall ticket sizes. The trend is increasingly visible outside the established metro markets.
India has an estimated domestic LGD production capacity of around 20 million carats annually, providing manufacturers with a significant base to cater to expanding domestic demand.
For jewellery retailers, the movement into smaller cities creates an additional market for lab-grown diamond products, particularly where consumers are seeking diamond jewellery at lower entry prices.
The expansion is accompanied by concerns over resale value and future pricing. Unlike natural diamonds, LGDs currently have limited resale value, while increasing production efficiencies and global supply could put further pressure on prices.
The reports also highlight potential margin pressure for retailers and manufacturers if selling prices continue to decline. Consumer perception remains another factor, with the industry continuing to address misconceptions around lab-grown diamonds.
For the trade, the next phase of the market will depend on whether LGDs can sustain demand in smaller cities while retailers manage inventory, margins and consumer expectations around long-term value.
