Budget 2023: Govt removes 5% duty on Lab-grown Diamond; know what it is, how it is made and its cost
“To encourage indigenous production of LGD seeds and machines and to reduce import dependency, a research and development grant will be provided to one of the IITs for five years,” the budget speech said
Government has removed 5 per cent customs duty on seeds used to manufacture rough Lab-grown Diamond (LGD). The announcement was made by Finance Minister Nirmala Sitharaman in her Budget 2023 speech made on 1 February.
The decision has been taken with a view to bring down cost of production of Lab-grown diamonds. LGD is a technology-and innovation-driven emerging sector with high employment potential, Sithraman said during her speech.
LGDs are environment friendly diamonds which have same optical and chemical properties as natural diamonds.
“To encourage indigenous production of LGD seeds and machines and to reduce import dependency, a research and development grant will be provided to one of the IITs for five years,” the budget speech said.
Budget 2023 Announcement on LGDs
- Focus on production of LGDs, an emerging tech driven industry
- 5-year grant to IIT Madras for R&D
- The research grant is Rs 242 crore
- Import duty made nil on import of raw material used to make LGD
- Customs duty levied on seed was at 5 per cent
What is Lab-grown Diamond?
- It is manufactured in laboratory
- It takes 35-45 days to prepare LGDs
- Colour, design, shine, cutting similar to natural diamonds
- Cost is 30 per cent down from natural diamonds
How LGD is made?
- There are two ways to manufacture Lab-grown Diamonds
- On emethod is CVD or Chemical Vapour Decomposition
- Second ways is HPHT or High Pressure High Temperature
- Carbon seed is required to make it
- Seed is an important raw material
- Carbon seed is imported from China
LGD market share in diamond industry
- LGD account for 10 per cent of diamond industry
- In 2020-21, exports went up by 102 per cent
- In 2022-23, exports were up by 60 per cent
- 60-70 per cent increase over 3 years
- Approximately 80 per cent cut and polished LGD is exported while 20 per cent is accounted for domestic consumption
- Exported to US, Hong Kong and UAE
Natural Diamond Rs 5.40-5.60 lakh
Lab-grown Diamond Rs 1.70-1.80 lakh
The industry welcomed the move. Reduction of duties on lab-grown diamonds, is support for the development of such facilities locally, Vivek Ramabhadran, CEO & Founder, Aulerth said while reacting to the step. Aulerth, founded in 2021 and based in India is a design house for jewelry.
The Indian government has announced to encourage the indigenous production of lab-grown diamonds, a research and development grant is to be provided to one of the IITs for five years, the policy is expected to address issues such as quality control, branding and marketing, and the development of human resources, Pawan Gupta, Director, PP Jewellers said.
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