Explained | Budget 2023: What are laboratory-grown diamonds as announced by Finance Minister Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman presents the Union Budget 2023.
| Photo Credit: ANI

The story so far: The 2023 Union Budget shines special attention on laboratory-grown diamonds (LGD). In her Budget speech, Finance Minister Nirmala Sitharaman said that the sector has “high employment potential” and announced a number of schemes to promote their research and development in India.

What are laboratory-grown diamonds?

As the name suggests, LGD are manufactured in laboratories, as opposed to naturally-occurring diamonds. However, the chemical composition and other physical and optical properties of the two are the same.

Naturally-occurring diamonds take millions of years to form; they are created when carbon deposits buried within the earth are exposed to extreme heat and pressure. On the other hand, LGDs are mostly manufactured through two processes – high pressure, high temperature (HPHT) method or Chemical Vapour Deposition (CVD) method.

Both HPHT and CVD methods of growing diamonds artificially begin with a seed — a slice of another diamond. In the HPHT method, the seed, along with pure graphite carbon, is exposed to temperatures around 1,500 degrees Celsius and extremely high pressure.

In the CVD method, the seed is heated to around 800 degrees Celsius inside a sealed chamber filled with a carbon-rich gas. The gas sticks to the seed, gradually building the diamond.

Scientists working at a General Electric research laboratory in New York are credited with the creation of the world’s first-ever LGD in 1954.

Are LGDs better than naturally-occurring diamonds?

Visually and chemically, the two are the same. However, the environmental footprint of a diamond grown in a laboratory is much lesser than that of a naturally-occurring diamond. According to a report by Diamond Foundry, an environmentally-conscious LGD manufacturer, it takes ten times more energy to extract a natural diamond from the earth than it takes in creating one above the ground. Open-pit mining, one of the most common methods of mining naturally-occurring diamonds, involves moving tonnes of earth and rock to extract these precious stones.

Provisions regarding lab-grown diamonds in the 2023 Budget

According to Finance Minister Nirmala Sitharaman, India is a global leader in cutting and polishing natural diamonds, but as its resources are becoming scarce, the industry is shifting towards LGDs. The 2023 Union Budget promises to reduce the basic customs duty on seeds used in the manufacture of lab-grown diamonds in a bid to popularise their production in India— the duty on seeds for rough LGDs will be reduced from 5% to nil. The change will come into effect starting February 2, 2023.

A five-year research grant will also be provided to one of the Indian Institute of Technologies (IITs) for research and development in the field of LGDs.

Ms. Sitharaman also proposed the creation of new tariff lines to help in better identification of a number of products, including synthetic diamonds. The aim of the move is to help facilitate trade as well as to have clarity on availing concessional import duty.

• laboratory-grown diamonds (LGD) are manufactured in laboratories, as opposed to naturally-occurring diamonds. However, the chemical composition and other physical and optical properties of the two are the same
• Visually and chemically, the two are the same. However, the environmental footprint of a diamond grown in a laboratory is much lesser than that of a naturally-occurring diamond
• he 2023 Union Budget promises to reduce the basic customs duty on seeds used in the manufacture of lab-grown diamonds in a bid to popularise their production in India— the duty on seeds for rough LGDs will be reduced from 5% to nil