đ Lab-Grown Diamonds: A $49.9 Bn Opportunity or a Curse?
India is betting big on the lab-grown diamond industry. While this could make us the diamond kings of the world, itâs not all very glittery. ReadOn to know more!
âDiamonds are a girlâs best friend.â
This idea has been planted in our minds, thanks to a 70-year-old song:Â
Why just girls, right now it seems like diamonds are the best friends of Indian banks!
From SBI to IndusInd Bank, everyone wants to fund diamond labs now.
Even Punjab National Bank (which earlier lost Rs. 14,000 crores to fugitive diamond merchant Nirav Modi) seems to have gotten over its trauma. It wants to offer a working credit line* to companies that are creating lab-grown diamonds.Â
But what are lab-grown diamonds and why are banks going crazy over them?
ReadOn!
đ§ Lab-Grown Diamonds Decoded
Lab-grown diamonds are super similar to real diamonds.
To quote Sheldon, theyâre both just carbon forms with the atoms more neatly stacked.
In fact, lab-grown diamonds need real diamonds to grow. Pieces of real diamonds called seeds are subjected to chemical processes in labs to create entire diamonds.
The major differences?
Lab-grown diamonds donât lead to widespread soil erosion due to mining.Â
They use 85% less water than real diamonds.
They don't lead to hundreds and thousands of workers falling sick due to horrible working conditions.
Theyâre 60-80% cheaper than regular diamonds because it takes less effort to produce them.
Okay, great deal for consumers. But, whatâs in it for Indian banks?
The key to becoming richie-rich!
The government wants us to unlock this opportunity. And it wants us to do it fast.
The 2023-24 Budget announced a five-year grant of Rs. 242 crores to IIT Madras for research on lab-grown diamonds.Â
It has also completely removed the 5% custom duty on diamond seeds which India imports.
This will make the production of lab-grown diamonds cheaper in India, prompting more jewellers/jewellery makers and startups to enter this space.
But, why this sudden love for lab-grown diamonds?
đ¤ Lab-grown Diamonds Can Make India Richie-Rich!
India is the worldâs largest exporter of cut and polished diamonds.
Ironically, we are also the largest importer of rough diamonds!
So, weâre basically getting rough diamonds, polishing them and exporting them.
Now, wouldnât it be a sone pe suhaaga if we could both produce and polish the diamonds?Â
Now, because we have very few diamond mines (located in Madhya Pradesh), we couldnât really produce diamonds.Â
Thanks to lab-grown diamonds, we can now produce diamonds too!Â
The global lab-grown diamond market is set to be worth $49.9 bn by 2030!Â
Whatâs more, it could create 10 lakhs jobs for us.
But ReadOn, we still have to import the seeds!
Well, these seeds need to be as tiny as human hair, so import costs will be greatly reduced!
Plus, once we grow enough lab-grown diamonds, we can use them for seeds (according to lab-grown diamond startup Aupulent).
ReadOn, do we even need this much diamond jewellery? Why are the banks and government investing so much in this space?
Well, well.Â
Lab-grown diamonds are not just here to replace mined diamonds and look pretty in a necklace. They can be used in diverse sectors like defense, IT, space tech and whatnot.
These lab-grown diamonds can support faster work speeds and survive in extreme environments. So, theyâre being used in 5G tech, satellites and even quantum computers.Â
Yes. diamonds are apparently the ultimate semiconductors!
And because they donât melt when heated, we could do away with expensive cooling systems required to run quantum computers.
So, lab-grown diamonds are great. But can they completely replace diamond mining?
Umm, thatâs a tricky questionâŚ
đ¤ The Problem with Lab-Grown Diamonds
While the world has gone gaga over lab-grown diamonds, India is sitting on the sidelines.Â
Only a few jewellers offer lab-grown diamonds and 60-70% of lab-grown diamonds are exported.
Hereâs how much our lab-grown diamond exports have grown over the years:
You see, Indians still hold real diamonds closer to their hearts.Â
Basic human trait: anything that is rare becomes more precious.Â
While diamonds may just be yet another fashion element for the West, it is considered an asset. It is an emotion.
Whether India adopts lab-grown diamonds or not is not a major concern.
Our major concern: climate change.
While some claim that lab-grown diamonds release lesser emissions, a report commissioned by the Diamond Producers Association claims that lab-grown diamonds actually produce three times more greenhouse gases than natural diamonds.
According to some other reports, labs require around 80 kWwh- 250 kWh hours of electricity to produce a one-carat diamond.Â
An average household in Delhi uses 250 kWh of energy in a whole month!
Since most of the energy we currently produce requires fossil fuels, lab-grown diamonds could lead to more harm than good.
The demand for power in India is growing every year, leading to power shortages and load sheddings. More lab-grown diamond factories could only make this worse.
So, should India wait to embark on this lab-grown diamond journey till we have energy security and use more green energy now?
Or should we jump on this opportunity now, make money and then use it to fund our green energy dreams? Do the benefits outweigh the problems?
đ¤ Noobâs corner
*Working credit line: A working credit line is a type of loan that allows you to borrow money up to a certain limit, which can be used to fund your business operations. It's a lifeline that can keep your business afloat when the waters get choppy, providing you with the flexibility and resources you need to weather the storm.
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