Lab-Grown Diamonds

This industry exists because scientific advances in Chemical Vapour Deposition and High Pressure High Temperature technology made it possible to grow chemically identical diamonds in weeks rather than wait for nature to form them over a billion years, and India's Surat-based diamond cutting expertise, built over decades around natural stones, turned out to transfer remarkably well to processing this new manufactured input.

The reason this deserves its own dedicated page rather than folding into a broader gems and jewellery category is that lab-grown diamonds now follow genuinely distinct economics, a technology-manufacturing cost curve rather than a scarcity-driven pricing model, and India's dominance here, over 95% of global lab-grown diamond polishing, is arguably even more concentrated than its historical natural diamond position.

Lab-Grown Diamonds is India's newest genuinely disruptive industry story, a manufactured, technology-driven product that grew from a niche curiosity into overtaking natural diamond exports by volume within roughly a decade, built almost entirely on Surat's pre-existing diamond cutting and polishing expertise, adapted to a completely different, factory-grown raw material.

The last two years have brought both triumph and crisis simultaneously, a historic export crossover where lab-grown diamonds overtook natural stones in volume, alongside a severe US tariff shock that has devastated the natural diamond side of the same Surat industry, showing how differently these two now-distinct product categories are actually faring.

Almost everything distinctive about this industry traces back to one insight: lab-grown diamonds behave economically like a manufactured technology product, not a scarce natural resource. That's why prices collapsed 96% between 2018 and 2025, the same cost-curve dynamic seen in solar panels or memory chips, and why India's advantage here rests on manufacturing and processing efficiency rather than access to mines.

This is also why the industry's two halves, lab-grown and natural, are now telling such different stories simultaneously. Lab-grown exports overtook natural by volume in FY2025-26, even as natural diamonds faced a severe, unrelated US tariff crisis, together showing an industry splitting into two genuinely distinct businesses sharing the same city and, often, the same companies.

India's lab-grown diamond exports reached roughly 18.8 million carats in FY2025-26, overtaking natural diamond exports of roughly 16 million carats for the first time, a crossover that held consistently through early 2026 rather than appearing as a single anomalous month.

This growth stands in sharp contrast to the natural diamond trade's severe contraction, cut and polished diamond exports (predominantly natural) fell 22.7% to $2.84 billion in the April-June 2025 quarter alone, following the 50% cumulative US tariff imposed over 2025.

Lab-grown diamond manufacturers earn on a manufacturing-margin basis, growing and processing stones at a cost that, even after the dramatic price declines covered elsewhere on this site, still allows profitable operation at scale, similar to how semiconductor or solar panel manufacturers earn despite continuously falling per-unit prices.

Cutting and polishing specialists, Surat's core historical strength, earn on processing fees and margin regardless of whether the rough stone is natural or lab-grown, meaning the crossover toward lab-grown volume doesn't necessarily threaten this specific part of the value chain, it simply shifts which type of rough stone increasingly flows through it.

Lab-grown diamond cost structure is dominated by energy and equipment costs for CVD/HPHT growth, capital-intensive but genuinely scalable, following a cost curve that continues improving with technology and volume, exactly the dynamic that drove the 96% wholesale price decline.

Natural diamond cost structure, by contrast, remains dominated by rough stone sourcing cost, now further complicated by Russian supply disruption and the added burden of US tariffs, a cost structure exposed to geopolitical risk in a way lab-grown manufacturing simply isn't.

Over the next five years, expect continued lab-grown diamond volume and value growth toward the $11.6 billion 2035 market projection, further price stabilisation as manufacturing costs approach a floor, and continued divergence between the lab-grown and natural diamond segments' fortunes.

The real test is whether Surat's diamond industry successfully completes its shift toward lab-grown as the dominant business line while managing the natural diamond segment's ongoing US tariff and supply crisis, or whether the natural diamond crisis inflicts lasting damage to the city's broader diamond ecosystem, including the cutting and polishing skills that both segments depend on.