The development of cultivating diamonds in India

With increasing consumer interest in sustainable and affordable alternatives to natural diamonds, laboratory grown diamond startups are rapidly expanding, with Indian companies aiming to establish themselves as leading national brands in the field.

 

Although there are traditional jewelers in the industry, no company has yet become the dominant player in the domestic synthetic diamond market. This brand vacuum has created significant opportunities for a new wave of startups that are expanding their retail business to capture a growing share of demand.

 

The artificial diamond industry in India is still in a very early stage. Many category awareness and category creation are still ongoing, "Vidita Kochar, co-founder of artificial diamond startup Jewelbox, said in an interaction with FE.

 

Kochar pointed out that currently no company has taken the lead in the field of laboratory produced diamonds nationwide. However, she remains optimistic about the potential of the market. As a brand established two and a half years ago and one of the early entrants, we have ambitious plans to expand our retail business. However, India is not a winner takes all market, and there are certainly multiple brands that can lead this category, "she said.

 

Jewelbox is headquartered in Kolkata and currently operates 8 stores in 6 cities including Delhi, Bangalore, and Chennai. The company plans to expand vigorously and aims to open 25 more stores by the end of this fiscal year, mainly in the most well-known first tier cities. Although the company continues to expand its retail business, about 40% of orders still come from its online platform.

Laboratory produced diamonds are becoming increasingly popular among consumers who have long yearned for diamond jewelry but have found natural diamonds to be too expensive. This niche market is creating a whole new market in India, and people who have never owned diamonds before are now starting to own diamond jewelry, "Kochar explained.

 

In addition to Jewelbox, several other startups are also entering the field, including Mumbai based Limelight and Fiona Diamonds, Wondr Diamonds, Truecare Diamonds supported by Titan Capital, Aupulent Jewellery, and Aukera Jewellery supported by Alteria Capital. According to Tracxn's data, India currently has 37 laboratory grown diamond startups, ranking first in the world in terms of number.

 

In addition, traditional participants have also realized the potential of the market. Recently, the gold trading platform Augmont invested 1 billion rupees to launch its laboratory grown diamond brand Akoirah.

 

Unlike natural diamonds, whose prices are based on the Rapaport price list, synthetic diamonds are priced based on production costs and retailers' added value. Previously, these diamonds were priced lower than natural diamonds, which brought considerable profit margins to suppliers. However, Kochar observed that the abnormal profits of the entire supply chain have now decreased.

In the past year, due to the relatively low cost of establishing production units, the price of diamonds produced in laboratories has dropped by 25-30% due to oversupply. If technological advancements reduce manufacturing costs, prices may further decrease. Although lower profit margins are a challenge, they also make laboratory produced diamonds more easily accepted by a wider audience.

 

Given that synthetic diamonds are not limited by supply, startups need to significantly expand their scale to sustain their business. To maintain a healthy average order value, startups in this field need to increase their order volume by at least 7-8 times, "said an investor in a synthetic diamond company. Ultimately, the success of this field will depend on brand building