Diamonds are forever. But will lab-grown diamond retailers go the distance?

“Consumers were demanding lab-grown diamonds. Also, with gold prices rising, new-age consumers are seeking alternatives such as accessible diamonds. When we conducted a pilot in 10 of our stores, we witnessed significant demand, which led us to expand to multiple stores,” said Ishendra Agarwal, founder and CEO of Giva, which is backed by Premji Invest and A91 Partners.

The chain, which started out in 2019 selling silver jewellery, now operates over 230 stores across India. Of these, 130 currently sell lab-grown diamonds, and the plan is to expand them to all stores. Agarwal says that while Giva’s average ticket size was around ₹2,000 when it solely retailed silver pieces, the addition of lab-grown diamonds has taken it up sharply to ₹16,000-20,000.

The lab-grown diamond segment currently contributes approximately 20% to the company’s overall business. Giva plans to increase that share, while expanding its store count to 800-1,000 in the next 4-5 years.

Agarwal is among dozens of founders chasing this emerging market, which has caught the attention of traditional business houses, entrepreneurs with no prior experience in jewellery retailing, and investors eager to back a business once dismissed.

As of February 2025, nearly 30 lab-grown diamond brands operated in India. Nine of these sell online, according to data sourced from retail consulting firm Wazir Advisors. The offline brigade, meanwhile, operates well over 200 stores selling lab-grown diamond jewellery across India.

Over and above this, there are smaller, local lab-grown diamond brands emerging across large cities. For instance, LinkedIn searches for lab-grown diamond brands in India throw up more results, with legacy jewellers and second or third-generation jewellers expanding into this segment.

However, a few large, established chains, such as Tata Group’s Tanishq, as well as Kalyan Jewellers, Bhima Jewellers, Joyalukkas, Bluestone, and PC Jeweller, have steered clear of the category.

Others are testing the waters. Early last year, Senco Gold & Diamonds entered the lab-grown jewellery market with its brand, Sennes, to gauge consumer behaviour. The company sells lab-grown diamonds in seven Sennes stores and via the brand’s website. Mint reported in May that Malabar Gold & Diamonds, too, may be looking for a taste.

One unwelcome development, however, threatens to ruin the party. According to a November report by consulting firm McKinsey, lab-grown diamonds are today selling at an 80% discount to their natural counterparts worldwide, partly because of industry effort to delineate the value of precious stones used in bridal jewellery. In comparison, LGDs were selling at a 20% discount to natural diamonds in 2018, the report added.

Confirming the trend, Wazir Advisors said that while lab-grown diamond supply has surged tenfold since 2018, global wholesale prices have plummeted 90% since then.

What they are

The concept of lab-grown diamonds is not entirely new. These diamonds are essentially created in controlled laboratory environments that replicate the natural conditions under which natural diamonds form deep within the Earth’s mantle.

Since they are more commoditized and not as rare as natural diamonds, whose supply depends on mining, lab-grown diamonds are far cheaper than their natural counterparts.

In more mature and affluent markets such as the US, the popularity of lab-grown diamonds began to rise significantly in the mid-2010s. As of 2023, half of all diamonds sold in the country were lab-grown, according to a report by Rapaport, an online diamond trading network. Lab-grown diamonds currently represent 30% of the global diamond jewellery market, with the US accounting for 75–80% of total consumption, per estimates by Wazir.

In India, however, the phenomenon is relatively new. “…demand has not been created to the extent that supply has been there,” Suvankar Sen, managing director and chief executive officer of Senco Gold & Diamonds Ltd, said during the company’s post-earnings call last February. “…gradually, as demand gets created, prices will stabilize,” he said.

Sen explained that lab-grown diamond prices have been falling for the past three to four years, a trend primarily attributed to a slowdown in the US market. Given that India is a major exporter of these diamonds, the decrease in US demand has led to a significant oversupply in India.

The economic slowdown in the US in the last six months has resulted in a large volume of products coming back to India on return agreements and other options, he added. This sudden surplus of lab-grown diamonds is prompting the industry to focus on building domestic demand.

Sen stated that consumers of lab-grown diamonds and natural diamonds will differ. “There is a latent need among customers to buy diamonds that are lab grown and lower in price to fulfill their fashion and lifestyle needs. The initial response has been good; there is curiosity and interest,” he told Mint.

The retailer has created a separate identity, store, and entity for lab-grown diamonds. People who wish to invest for the future, will continue to invest in natural diamonds, he said.

To be sure, India’s natural diamond market, worth an estimated $6.2 billion in FY25 according to consulting firm Wazir Advisors, is much larger than its lab-grown counterpart, which has a very modest size of $0.4 billion. Both segments are expected to grow.

The lab-grown market is projected to grow at a 14% CAGR, reaching $0.6 billion by 2028 on current trends, said a Wazir Advisors report. Growth could accelerate to 20% with increasing consumer awareness and category-building by existing companies, and up to 25% with new market entrants, driven by rising PE investments in such companies, it noted. Meanwhile the natural diamond market is projected to reach $8.6 billion by 2028, the consultancy added.

Indeed, last month, on his maiden visit to India, Al Cook, global chief executive officer at diamond trader De Beers Group, said that the size of India’s natural diamond market is likely to double in five years due to rising demand. India overtook China about a year ago and is now the second-largest diamond market for De Beers after the US. De Beers has partnerships with homegrown jewellery chains such as Tanishq.

Brand explosion

How people buy jewellery is changing, mainly because of the younger generation. As Gen Z begins to purchase fine jewellery, several clear trends are emerging: people are buying more often, they care more about ethical sourcing, and they are utilizing diverse shopping channels. Younger shoppers are also shifting away from viewing jewellery as merely a store of value to seeing it as a fashion accessory.

This is leading to a rise in the popularity of lightweight jewellery, imitation pieces, 14-carat gold, and lab-grown diamonds. The recent rally in gold prices is further prompting consumers to seek more affordable options. Ownership of diamonds is currently less than 10% in India.

At legacy jewellery chain C. Krishniah Chetty Group, the majority of people buying lab-grown diamonds are millennials, Gen Z professionals, newlyweds, and independent women making self-purchases. Many are first-time buyers.

Pakhi Saxena, practice head, retail, at Wazir Advisors, believes that lab-grown diamonds will continue to appeal to younger consumers not looking at jewellery as an investment.

Demand for lab-grown diamonds is accelerating, particularly within the luxury segment, said Devangi Nishar Parekh, managing director, Aza Fashions. Late in April, the multi-brand fashion retailer announced the launch of Araiya by Aza, a lab-grown diamond jewellery brand. Aza, which caters to the affluent wedding shopper, cited a clear shift in the jewellery preferences of modern couples.

Rupesh Jain, whose jewellery brand Candere was acquired by Kalyan Jewellers in 2021, started lab-grown diamond label Lucira in April, targeting consumers unable to afford pricey natural diamonds. Lucira, which operates as an online brand, will have an offline presence in the next three months.

Jain likens the popularity of lab-grown diamonds to the electric vehicle market. He explains that both products initially faced reluctance from both the demand and supply sides. “Initially, electric vehicles were having a lot of problems getting into the country. But once infrastructure started developing and larger players like Mahindra and Tata got into it, a lot of consumers also started accepting it,” he said. “I’m very sure that as we are talking, larger houses like Aditya Birla Group or the Tatas will enter the LGD market.”

The Tatas have already dipped a toe in the LGD pool. Last year, retail arm Trent launched lab grown diamonds under the ‘Pome’ brand, to be sold in select Westside stores.

There is a latent need among customers to buy diamonds that are lab grown and lower in price to fulfill their fashion and lifestyle needs.
—Suvankar Sen

Later this month, Solitario, a brand backed by actor Vivek Oberoi, is set to open within department store chain Shoppers Stop. The brand will retail exclusive designs and collections for the chain, starting with seven stores, with plans to subsequently roll out in other markets. Shoppers Stop operates 157 stores across India.

But Solitario shut its store in Ludhiana earlier this year after operating it for seven months, citing a lack of demand for its styles. “The market is very different,” said CEO Ricky Vasandani.

Heavy upfront investment

Breaking into a new market means smaller companies have to invest more time and money into building consumer awareness. However, since large companies have largely stayed away from the market, it falls on the smaller ones to drive engagement. This often involves securing expensive retail locations, sometimes next to established jewellers. They also need to collaborate with celebrities and invest heavily in designs and pieces.

Many brands told Mint that their first few months were quite challenging. Lisa Mukhedkar, founder and CEO of Aukera Grown Diamond Jewellery, who launched her first store in Bengaluru in 2023, explains that venturing into the category was not easy at all. There were days when not even one customer walked into its stores. But things are picking up now, she said.

Early last year, the company raised $3.9 million in Series A funding from Fireside Ventures, valuing it at $14.7 million. The retailer recently entered markets in the North with a store each in Gurugram and Noida. It currently operates 10 stores and plans to add 7-8 more over the next 12 months. Aukera is also opening stores next to established jewellery retailers, hoping to capitalize on the existing market for gold and diamonds.

Typically, most brands prefer to secure spaces near existing fashion jewellery stores to capitalise on micro market footfalls and offer alternatives to shoppers visiting these areas. Additionally, they target upper-middle to high-income consumers to expand their customer base, said Saurabh Shatdal, executive managing director, Capital Markets and Head Retail, India, CBRE.

“I don’t think there’s a woman looking for diamonds who hasn’t heard of LGDs,” said Mukhedkar. There is no longer a ‘typical’ lab-grown diamond buyer, and anyone shopping for fine jewellery is a potential customer, she added.

Margin pressure

The sharp decline in the prices of lab-grown diamonds could exert pressure on margins, say analysts. Heightened competition will only prompt retailers to discount more.

Initially, the high margins on lab-grown diamonds incentivized jewellery retailers to adopt them, according to Wazir Advisors. However, while subsequent price declines were offset by increasing demand, the sharply lower prices today pose a considerable challenge, and are severely impacting retailer profitability.

From Wazir’s perspective, the widening price gap between natural and lab-grown diamonds complicates the situation, making it difficult for jewellery retailers to sell LGDs due to their low margins and consequent impact on overall profitability.

In a move that clearly draws a distinction between natural and lab-grown stones, the Gemological Institute of America (GIA) announced earlier this month that it will no longer use its internationally recognized 4Cs grading system (used to determine the quality and clarity of a natural diamond) for lab-grown diamonds. Instead, beginning later this year, laboratory-grown diamonds submitted to the GIA will receive descriptors categorizing them broadly as “premium” or “standard”, with no grade at all for subpar quality.

In India, meanwhile, more brands are expected to wade into the LGD arena, seeking to capitalize on the burgeoning demand. Giva’s Agarwal said a new category always attracts the attention of both new and existing brands. “Then the market saturates to a few large players and a long tail of small players. This will happen in India in the next two to three years,” he said.

“It is a category with low entry barriers because there’s so much available. Very soon a large player will enter; this won’t need consolidation because the category is still being built,” said Wazir Advisors’ Saxena.

Senco’s Sen, however, believes there will be a consolidation. “The ones who are thinking long-term will be the ones to stay,” he said.