Lab-grown diamonds also called synthetic diamonds are created in labs using special methods like High Pressure High Temperature (HPHT) or Chemical Vapor Deposition (CVD). They have the same chemical composition as natural diamonds but usually cost at least 30% less. Many younger buyers prefer them because they are seen as more ethical and environmentally friendly.
India is a key player in cutting and polishing diamonds and is also becoming a major producer of lab-grown ones. On the other hand, the U.S. is the biggest market for buying diamonds and gems. So, any changes in trade rules between India and the U.S. can have a big impact on the global diamond industry.
According to the Coherent Market Insights, the Synthetic Diamond Market is estimated to be valued at USD 27.73 Bn in 2025 and is expected to reach USD 44.53 Bn in 2032, exhibiting a compound annual growth rate (CAGR) of 7.0% from 2025 to 2032.
- U.S. Tariff Policy: What Changed?
In July 2025, the U.S. announced a sweeping 25–27% tariff on imports from India, specifically targeting diamonds, jewellery, gems, textiles and other goods.
- Cuts on gems and jewellery now face approximately 24–27% duties (depending on classification).
- For cut and polished natural and lab‑grown diamonds originating in India, tariffs rose from around 6–7% to 26–29%, eliminating previous minimal‑duty status.
This represents a structural shift in trade dynamics, reversing long-standing low barriers to Indian jewelry and diamond exports into the U.S.
- Impact on U.S. Consumers and Retailers
Price hikes and supply disruption
Price hikes and supply disruption
With import duties rising by 20–27 percentage points, U.S. jewelry importers see immediate cost increases, meaning final retail prices may rise 10–20% or more for items containing Indian lab-grown or natural diamonds.
Retailers may:
- Pass the extra cost to consumers.
- Absorb it, compressing margins from historical 12–15% down to 5–8%.
Demand softening
Demand softening
In Q1 2025, U.S. lab‑grown diamond sales rose 35%YoY—but demand for lower‑price segments (<$1,000) fell around 7%, especially pressure‑sensitive buyers pulling back. Anecdotally, Reddit users reported price jumps even before tariffs officially took effect, speculating tariffs as a cause.
Supply chain congestion
Supply chain congestion
Because India handles roughly 90% of the world’s diamond polishing and serves over 60% of U.S. processing needs, the U.S. has limited domestic capacity to pick up the slack. As a result, inventory gaps and longer logistics cycles (e.g., rerouting via Dubai) escalate cost and delivery times.
Shift to alternatives
Shift to alternatives
To avoid Indian tariffs, U.S. jewelers may pivot toward:
- Chinese or other producers — although also subject to tariffs.
- Natural diamonds or lab diamonds grown in non‑tariffed regions.
- Simulants (moissanite), pre‑owned jewelry, or smaller stones as consumers seek affordability options.
- Impact on India: Industry & Jobs at Stake
Exports collapse
Exports collapse
India’s gems & jewellery exports to the U.S. totaled roughly USD 10‑11 billion in FY2023‑24 and FY2024‑25. The jump to 26–29% tariffs is expected to cut U.S. orders by 30–50%, leading to revenue losses of several billion USD.
Surat—the world’s diamond hub—faces acute copy. Export volumes have already dropped 17%‑16% before tariffs. With new duties, revenue is projected to shrink further, potentially halved from peak levels.
Employment crisis
Employment crisis
The gems & jewellery sector employs 1.0–1.2 million workers in Surat, Mumbai, Jaipur and across small‑scale MSMEs acting as polishing, cutting, and assembly units.
Industry experts forecast 100,000‑150,000 job losses in gold jewellery alone, with more in diamond processing if export orders diminish.
Lab‑grown diamond producers under pressure
Lab‑grown diamond producers under pressure
India’s burgeoning lab‑grown diamond segment—once a bright spot—now faces price erosion and reduced competitiveness. According to the Global Trade Research Initiative (GTRI), lab-grown diamond prices in India fell by 65% within a year, from ₹60,000 to ₹20,000 per carat, hurting profitability and consumer trust.
With new tariffs of ~29%, Indian lab-grown exports lose price advantage overseas, risking market share to producers in countries without such duties.
Strategic and policy shifts
Strategic and policy shifts
India is mobilizing responses:
- Advocating for trade deals or tariff exemptions—In May 2025, De Beers approached the Indian government to demand zero‑tariff access for Indian‑cut diamonds into the U.S. market.
- Accelerating R&D via the India Centre for Lab-Grown Diamonds (InCent‑LGD) at IIT Madras to build indigenous technology and diversify applications beyond jewelry, into electronics, thermal and quantum systems.
- Encouraging market diversification to Europe, the Middle East, ASEAN or UAE (under CEPA) to reduce dependency on U.S. demand.
- A Turning Point — From Threat to Opportunity
This tariff shock, while painful, also offers a pivot moment:
- India can move from processing hub to innovation hub, if it invests more deeply in R&D, quality certification, and export branding (especially for lab-grown diamonds) to command premium pricing.
- Expanding into industrial applications of lab-grown diamonds—semiconductors, quantum sensors, thermal management—could unlock high-margin new markets beyond jewellery.
- Brands and exporters may consider establishing production in tariff-friendly zones or countries, adopting localized manufacturing to beat import duties.
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