- By Priti Gupta in Mumbai and Ben Morris in London
- business reporter
Chintan Suhagiya is only 26 years old but already has seven years of experience in the Indian diamond industry.
Initially he transported diamonds through his company based in the diamond cutting capital of the world, Surat in western India.
But over the years he learned how to inspect diamonds, and now he uses specialized equipment to assess their quality.
His career was changed by a seismic shift in the diamond industry. Up until two years ago, all the diamonds he studied were natural diamonds that were pulled from the ground in diamond mines.
Today he works with diamonds grown in special machines, an industry that barely existed a decade ago but has seen explosive growth thanks to improved technology.
Laboratory grown diamonds (LGDs) are so similar to natural diamonds that even experts need to take a close look.
“No naked eye can tell the difference between natural and lab grown diamonds,” says Mr. Suhagiya.
“Natural diamonds and lab-grown diamonds are so similar that at one point, even after lab testing, there was confusion about a diamond’s origin. The diamond had to be tested twice to make sure it was a lab grown diamond,” he says.
Natural diamonds are formed deep underground under intense heat and pressure, and since the 1950s scientists have attempted to replicate this process above ground – resulting in two techniques.
In the high-pressure, high-temperature (HPHT) system, a diamond seed is surrounded by pure graphite (a type of carbon) and subjected to temperatures of approximately 1,500°C and pressurized in a chamber to approximately 1.5 million pounds per square inch.
The second process is called chemical vapor deposition (CVD) and involves placing the seed in a sealed chamber filled with carbon-rich gas and heating it to about 800°C. The gas adheres to the seed and atom by atom builds a diamond.
While these techniques emerged in the late 20th century, it has only been in the last 10 years that the process has been refined so that lab grown diamonds can be produced at the right price and quality to be sold as jewelry.
“It was more difficult in the beginning because there were very few machines and very few scientists who were able to do it… over the past seven years as more expertise has become available in the market, we’ve seen really big growth. says Olya Linde, a Zurich-based partner in Bain and Company’s Natural Resources practice.
Ms. Linde says the cost of producing lab-grown diamonds has halved every four years since the early 2000s.
Today, a one-carat lab-made diamond — a popular size and common in engagement rings — would be around 20% cheaper than its naturally formed equivalent.
These falling costs have attracted entrepreneurs.
Snehal Dungarni is the Managing Director of Bhanderi Lab Grown Diamonds, which he founded in 2013. It uses the CVD process to produce diamonds.
“We are able to follow the growth of diamond atom by atom at the highest purity.
“They’re comparatively cost and time effective, and they save on quarrying and mining costs — making them human-friendly and environmentally friendly,” he says.
India has long played a key role in the diamond industry – it is estimated that nine out of ten diamonds in the world are cut in Surat.
Now the government wants India to become a major player in the lab-grown diamond business.
According to the Department of Trade and Industry, the country already produces around three million lab-grown diamonds annually, accounting for 15% of global production. China is the other major producer with a similar market share.
To further boost the sector, the Indian government scrapped a 5% tax on imported diamond seeds in January and announced funding to help India build its own diamond seed production.
“As global prosperity increases, the demand for diamonds will increase,” says Vipul Bansal, deputy secretary at the Department of Commerce.
With 30 years of experience in the traditional diamond industry, Hari Krishna Exports is India’s leading manufacturer of cut and polished diamonds.
But this year director Ghanshyambhai Dholakia launched a lab grown diamond business.
“Over the next three to four years, we’re going to see massive demand and growth in lab-made diamonds,” he predicts.
But will the new company take market share from its traditional diamond business?
“Both natural and lab-created diamonds cater to different consumer segments. And there is demand in both segments,” says Mr. Dholakia.
“LGD has opened up a new consumer market — the middle class in India — who have money and can afford a lab-grown diamond,” he says.
However, it might take some time for this market to gain momentum in India. Most LGDs manufactured in India are exported to the United States.
“The Indian market is not ready yet, so as a Council we are promoting exhibitions and events to create a place for LGDs. In three to four years, India will be ready,” says Shashikant Dalichand Shah, Chair of the Lab Grown Diamond and Jewelery Promotion Council.
Mr. Shah is Chairman of Nine Diam, a diamond trading company founded by his great-grandfather.
He agrees that manufactured diamonds will have a very different place in the market than those that have been mined.
“A diamond made in a laboratory or factory is an artificial diamond. So a buyer who knows and loves diamonds will always go for a real diamond,” he says.
He adds that the relative scarcity of natural diamonds means they will hold their value better.
“Labor grown diamonds lose their value after purchase, while a natural diamond retains 50% of its value after purchase,” he says.
While this may be the case, lab grown diamonds offer jewelry designers more flexibility.
“Natural diamonds are so expensive that you always want to maximize the diamond from the natural stone. You can design lab-grown diamonds however you like,” says Ms. Linde.
“We’ve seen jewelry where holes have been cut in the diamonds to give them more dangle and sparkle.”
Back in Surat, Chintan Suhagiya is happy with his move into the LGD industry and believes many others will find work in the sector.
“The laboratory diamond industry will provide millions of jobs. This will be an unstoppable industry,” he says.