As the prices of natural diamonds rise in India, synthetic or lab-made diamonds are gaining a foothold. "The synthetic diamond market has captured around one per cent of the overall diamond jewellery market in India," said Vipul Shah, Chairman of the Gems & Jewellery Export Promotion Council (GJEPC). Synthetic diamonds were introduced two decades ago to serve the interests of price-sensitive customers. Since then, its market has been growing at a compounded annual growth rate of 25 per cent.

Currently, the gold and diamond jewellery market in India is estimated at Rs 3 lakh crore. Of this, branded products account for six to seven per cent. In the last two decades, the synthetic diamond market has grown to Rs 3,000 crore.

Since synthetic diamonds can't be differentiated from natural ones by the naked eye, customers often buy expensive diamonds only from trustworthy, branded retailers. Sometimes, however, street shop owners lure customers with discounts on synthetic diamonds, which they market as natural ones.

There are many reasons why the demand for synthetic diamonds has risen. "Synthetic diamonds are 40 per cent cheaper, owing to its cost-effective nature of manufacturing. Therefore, its demand is increasing rapidly," said Shah.

Moreover, such diamonds are considered 'green' and 'conflict-free'. Jewellery made from synthetic diamonds is abundantly available in developed markets such as the US and Europe. The jewellery industry is concerned about the growing demand in this segment.

"Being the smaller market, currently, it is not a threat. But if its growth momentum continues, it would be a great threat for the diamond jewellery industry in India," said Shah. Considering the significance of synthetic diamonds, the GJEPC, along with the Gemmological Institute of India, plans to spread awareness on synthetic diamonds to traders, jewellers and customers.