The Central Board of Indirect Taxes & Customs (CBIC) will require, from 1 December 2024, all exporters and importers of lab-grown diamonds (LGDs) to declare the manufacturing method used for producing these diamonds in customs declarations.
The regulation, which applies to synthetic or reconstructed diamonds, aims to streamline customs processing and improve the accuracy of trade assessments, enhancing the overall efficiency in the trade of lab-grown diamonds.
This requirement supports CBIC’s aim to improve customs operations amid the rapid expansion of the lab-grown diamond market, projected to reach $15 billion by 2035.
Key Regulations and Customs Process Updates
According to the CBIC circular, importers and exporters must specify one of three manufacturing techniques: Chemical Vapour Deposition (CVD), High Pressure-High Temperature (HPHT), or other methods. This directive builds on the Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018 and the Shipping Bill Regulations, 2019, enabling better classification and reducing the number of customs queries that arise due to insufficient product information.
CBIC expects that disclosing manufacturing methods will streamline customs assessments and contribute to faster clearance processes, enhancing trade efficiency for LGDs.
Market Performance and Economic Context
Data from the Gem and Jewellery Export Promotion Council (GJEPC) highlights fluctuating trends in India’s lab-grown diamond exports. Following a period of rapid growth with over 100% increase in exports in 2021-22 and a 28% rise in 2022-23, 2023 saw a significant 16.5% decline in export value, dropping from $1.68 billion (₹13,468 crore) in 2022-23 to $1.4 billion (₹11,611 crore). However, while the value declined, export volumes in terms of carats continued to rise, reflecting a broader price correction within a competitive market.
This trend indicates ongoing adjustments in lab-grown diamond values due to rising production and market expansion. Importantly, LGDs represent a non-monopolised segment, allowing competitive pricing dynamics to influence the market.
A Strategic Step for India’s Gem and Jewellery Export Sector
The new CBIC regulations contribute to India’s strategy to advance its export capabilities in the lab-grown diamond sector, a crucial segment within the country’s broader gem and jewellery industry, which accounts for around 9% of India’s total merchandise exports. As lab-grown diamonds continue to develop technologically and expand market presence, India’s push for enhanced customs protocols represents an effort to maintain its competitive edge globally while fostering sustainable industry practices.
Implications for the Jewellery Industry
For jewellers, this regulatory shift underscores the growing significance of lab-grown diamonds, which are gaining a broader consumer base both in jewellery and other sectors. Aside from jewellery, LGDs are employed in technology industries, including electronics and medical equipment, due to their stability and efficiency under extreme conditions.
CBIC’s data transparency measures on production methods could help jewellers improve supply chain traceability, responding to consumer interest in ethically-sourced products.
