Whalesbook
India's Diamond Market Surges to Second Globally
India is now the world's second-largest diamond jewelry market, holding a 12% share of global demand. This position is ahead of China and Japan (each 5%), but far behind the United States, which leads with 53% of the global market. The Indian Natural Diamond Jewellery (NDJ) market is valued at ₹785 billion. Women's overall diamond jewelry ownership has risen to 15%. This growth is supported by projected 11% annual increases in India's GDP and personal disposable income through 2030. This fuels a luxury goods market anticipated to reach $200 billion by 2030. For comparison, the U.S. jewelry market is projected to reach $97.62 billion by 2030 (3.72% CAGR), and China's diamond jewelry market is expected to hit $14.06 billion by 2030 (5.4% CAGR). India's share of the global diamond market revenue stood at 7.9% in 2024.
Young Consumers Driving Demand and Daily Wear
Younger demographics are largely driving the surge in India's diamond market. Generation Z (aged 18-28) now makes up 51% of total market value, a 19-percentage-point jump since 2022. Millennials add another 35%, meaning these younger groups control 86% of the market's value. This demographic shift coincides with a significant change in consumer behavior: diamonds are moving from being kept as 'locker luxury' to being worn as part of daily self-expression. In 2014, only 27% of acquired diamonds were worn daily; now, 52% are worn every day. This trend is also seen in a rise in self-purchases by women. Outside of weddings, 64% of natural diamond jewelry acquisitions are now made by women for personal rewards or milestones. This trend is amplified by rising female financial independence and a growing middle class with increased discretionary spending power.
Lab-Grown Diamonds: The Price Factor
While natural diamonds remain popular, lab-grown diamonds (LGDs) have become a major market force, accounting for over a fifth of the diamond jewelry value purchased by women in 2024. LGDs offer a significant price advantage, typically costing 70-90% less than natural diamonds, positioning them as an 'affordable luxury'. This price differential has broadened market access, appealing particularly to younger consumers who value sustainability and price transparency. However, the LGD market has seen severe price drops. Prices for one-carat and two-carat LGDs have fallen by up to 96% since 2018. Analysts note a 90% discount to natural diamonds today, compared to just 10% in 2015. This oversupply and rapid price decline are eroding consumer confidence in LGDs. They are increasingly seen as fashion accessories rather than long-term assets, with minimal resale value in India. Despite these issues, India is a major producer of LGDs, and the sector is expected to grow significantly in volume, faster than natural diamonds.
Risks to India's Diamond Market Growth
Despite India's impressive market growth, several factors pose significant risks to its continued expansion. Reliance on Generation Z and Millennials makes the market vulnerable to changes in their spending habits or economic downturns impacting younger, less established incomes. Affordability remains a major barrier for many consumers; 24% cite it as the main obstacle to buying natural diamonds. The steep price drops in the LGD market (up to 96% since 2018) directly threaten the perceived value and long-term investment potential of all diamonds. This could spark a price war that cuts into margins across the sector. Growth is also concentrated among affluent SEC A households, raising concerns about vulnerability to economic fluctuations affecting high-net-worth individuals. While the shift to daily wear is positive, a return to traditional gifting and special-occasion purchases could change market dynamics if economic conditions or consumer sentiment shift. The U.S. market's dominance, with 51.2% of global revenue in 2023, highlights the intense competition India faces, even in its second-place position.
Growth Prospects for India's Diamond Industry
India's natural diamond jewelry market is projected to reach ₹1,50,000 crore (about $1.8 billion USD) by 2030. The diamond jewelry industry in India is forecasted for a strong 7.0% CAGR from 2026 to 2036. This growth is driven by strong economic fundamentals and the structural shift towards daily self-expression. Analysts expect steady growth for the global jewelry industry, with McKinsey forecasting a 4-6% rise through 2027. India's organized retail sector is expanding rapidly, entering Tier 2 and Tier 3 cities and increasing accessibility for aspirational consumers. The rise of LGDs, while disruptive, also means market expansion. India's LGD market is projected for substantial growth, fueled by cost-consciousness and sustainability appeal. India's overall luxury market is set for significant expansion, creating fertile ground for high-value goods like diamonds.