Explainer: Lab-grown diamonds get a Budget boost, but what are they?

In order to encourage indigenous production of lab-grown diamond seeds and machines and to reduce import dependency, Finance Minister Nirmala Sitharaman has proposed a research and development grant to one of the IITs for five years.
Lab Grown Diamonds (LGD) is a technology-and innovation-driven emerging sector with high employment potential. These environment-friendly diamonds have optically and chemically the same properties as natural diamonds.These take 15-30 days to create in a laboratory in Surat in Gujarat, India’s diamond capital.
The only difference between lab-grown diamond and natural diamond is that instead of digging the earth, it is created in a lab under a machine.
Lab-made diamonds are developed from a carbon seed placed in a microwave chamber and superheated into a glowing plasma ball. The process creates particles that crystallise into diamonds in weeks.
There are two types of lab-grown diamonds -- CVD and HPHT. India particularly specialises and leads in the chemical vapour decomposition (CVD) technology that is certified as the purest type of diamonds.
India is a global leader in cutting and polishing of natural diamonds, contributing about three-fourths of the global turnover by value.
With the depletion in deposits of natural diamonds, the industry is moving towards Lab Grown Diamonds (LGDs) and it holds huge promise.
To seize this opportunity, the government also proposed to reduce basic customs duty on seeds used in their manufacture to nil from the current 5 percent.
Gem and jewellery exporters on January 9 had urged the government to announce support measures like the abolition of import duty on raw material for lab-grown diamonds and jewellery repair policy to promote the sector and boost shipments.
The industry stated that the conventional source of rough diamonds across the world faces threats of deposit depletion, which also contribute to the exponential increase in the cost of extraction. Industries have thus found lab-grown diamonds to be a profitable alternative.
An LGD is produced using a seed, which is a crucial raw material.
"It was a mixed budget for the gems and jewellery industry as the finance minister did acknowledge the potential of the LGDs for exports, and to create employment," said Kama Jewelry Managing Director Colin Shah
The government, however did not make any announcement with ragard to natural diamond.
"There was no announcement for the natural diamond industry in terms of duties and our SNZ’s. Not having a repair policy will also be damaging for our DTA Jewellery exporters," said Shah.
The year 2019, particularly, was the year for lab-grown diamonds.India alone witnessed a sharp rise in lab-grown diamond exports worth $443 million which rose 102 per cent year-on-year, according to a report by Prabhudas Lilladher,
Even at the beggining of 2020, lab-grown diamond exports in India were up 60 per cent on year while natural diamond exports were down by 41 per cent y-o-y.
Currently, 25-30 per cent of diamond polishing units in Surat service lab-grown diamonds, with 15 per cent of units dealing only in the lab-created commodity.
The export of polished lab-grown diamonds grew by 60.08 per cent so far in fiscal 2023 while that of cut and polished diamonds has fallen by 1 per cent in the same period, according to a report by Gems and Jewellery Export Promotion Council (GJEPC). The overall industry witnessed 8 per cent growth of import of rough diamonds during the same period.