Grown diamonds are expected to meet nearly 1.9 per cent of the global polished diamond sales revenue by 2018, according to Frost & Sullivan's research estimates.
Grown diamonds are cultivated from small diamonds in a greenhouse in carbon-rich environment maintained for 12-14 weeks. By the end of this period, the diamond seed, which has undergone a natural crystallisation process, results in a Type IIa rough diamond.
A recent report, Grown diamonds, a sunrise industry in India: prospects for economic growth, by the PHD Chamber of Commerce says the grown diamonds industry has the potential to employ over 1 million people considering production could touch around 150 million carats. It currently employs 2,000 people only across the globe for an estimated 360,000 carats.
Grown diamond polishing could be an answer to India's diamond industry blues, which is facing sluggish demand in international markets. Surat, the diamond capital of India that polishes eight out of ten rough diamonds in the world, has seen 20,000 people rendered jobless in the past few months. The Rs 90,000 crore industry is reeling from debt and default.
Vishal Mehta, chief executive officer of IIa Technologies, which grew 300,000 carats of Type IIa grade diamond last year, said, "India has invested heavily in diamond cutting and polishing and grown diamonds can offer a diamond source for the 21st-century consumer. Our largest jewellery export market is still the US and having an eco-friendly, conflict-free and origin-guaranteed source of diamonds is what Americans are looking for."
However, Dinesh Navadia, president of the Surat Diamond Association, does not buy this argument. "People do not understand the difference between synthetic diamonds and grown diamonds. The fact that grown diamonds are not artificial is known only to traders and industry insiders. As of now, no one would want to buy a grown diamond, even if the prices are 30-40 per cent less," he said.
Rough mined diamond supply is projected to decline from 125 million carats to 14 million carats in 2050, according to the PHD Chamber report. However, demand for rough diamonds is poised to rise to 292 million carats.
An estimated $13 billion worth of rough diamonds are mined every year. Only 15 new mines are expected to become operational in the next 40 years. Navadia, however, said the crisis in rough diamonds was likely to ease in the coming years as more mines were discovered.
"Brands like Pure Grown Diamonds have taken steps in the right direction by starting to work with retailers that sell both grown and mined diamonds. This is happening in the US and has been very successful. It will continue to other parts of the world as the grown diamond supply expands," Mehta pointed out.
Exports of cut and polished diamonds constitute 47 per cent of the gems and jewellery exports from India. The EU, the UAE, Botswana, Russia and India are the major exporters of diamonds worldwide, constituting 73 per cent of global exports (307 million carats).
India, the EU, the UAE, China and Israel are also the major import destinations, which comprise 376.76 million carats, or 90 per cent of global imports of diamonds from the rest of the world.
Prices of rough diamonds have increased by 70 per cent, while polished diamond prices have increased by only 30 per cent, resulting in profit margins of diamond manufacturers shrinking to 0.3-2.3 per cent.
KPMG, an international tax and accounting firm headquartered in the Netherlands, forecasts that by 2015, the global share of China's diamond processing industry will reach 21.3 per cent, while India's share will decline from 57 per cent to 49 per cent.