Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, but why and how too. We do this show in both formats: video and audio. This piece curates the stories that we talk about.
You can listen to the podcast on Spotify, Apple Podcasts or wherever you get your podcasts and video on YouTube.
Today on The Daily Brief:
- Diamonds for everyone
- Will PhonePe and Google start blocking users?
- WazirX drama becomes more dramatic
Diamonds for everyone
Ajoy Chawla, the CEO of Tanishq, India’s largest jewellery brand, recently mentioned to NDTV Profit that lab-grown diamonds aren’t a significant concern for them. Even though they sell a substantial amount of diamond jewellery to younger customers, including Gen Z, lab-grown diamonds aren’t really on their radar.
That’s precisely what we want to delve into today—lab-grown diamonds.
During their recent earnings call, when asked about customer interest in lab-grown diamonds (LGDs), Ajoy Chawla shared some insights:
“We’ve been trying to track inquiries on a continuous basis across all Tanishq, CaratLane, Mia, and Zoya stores. At Zoya, there are very few inquiries. So far, we have not seen material interest. Customers are more curious and want assurance that what we’re selling is natural. Some have even requested certification to confirm that our diamonds are entirely natural. We’ve addressed these concerns, and we’ve had to certify that our diamonds are indeed natural.”
Lab-grown diamonds have gained popularity over the past 5-10 years, and when jewellers start discussing them, it signals that something significant is happening in the market.
Let’s begin with the basics: the difference between a natural diamond and a lab-grown diamond.
Natural diamonds form over billions of years under extreme pressure and temperature deep within the Earth. These diamonds are then mined, processed, and sold. On the other hand, lab-grown diamonds are created in controlled laboratory environments using processes that replicate the natural conditions under which diamonds form. These processes can take a few weeks to several months.
Lab-grown diamonds are more affordable due to lower production costs. Traditional diamond mining has a negative environmental footprint, while lab-grown diamonds are much more sustainable.
But how did lab-grown diamonds come into existence?
Here’s a brief history: In the 1950s, the first synthetic diamonds were created for industrial use, valued for their hardness and thermal conductivity. However, these early diamonds were of low quality and unsuitable for jewellery. Fast forward to the 2000s, advancements in technology significantly improved the quality of lab-grown diamonds while reducing production costs by around 90%.
As a result, colourless lab-grown diamonds suitable for jewellery became commercially available, and the market has been expanding ever since.
Now, here’s something interesting: Industry experts estimate that India’s lab-grown diamond retail market is currently valued at around $300 million and could reach $1 billion in just two years! Moreover, India holds a 25% market share in production.
According to Jefferies, the global lab-grown diamond market has grown rapidly, expanding fourfold in volume between 2018 and 2022, primarily driven by affordability. In India, lab-grown diamond exports surged eightfold over four years to $1.7 billion in FY23. The United States remains the largest market, accounting for more than 75% of global volumes. Lab-grown diamonds now hold a 10% share in the engagement ring market.
Naturally, two questions come to mind: What’s the price difference, and more importantly, what’s the resale value of lab-grown diamonds?
On the price front, Jefferies notes that lab-grown diamonds are significantly cheaper than natural diamonds due to lower production costs. In 2016, lab-grown diamonds were about 15% cheaper than natural ones, but this discount has since widened to around 75%.
For example, a good-quality one-carat natural round diamond costs at least ₹2.5 lakh, while a lab-grown diamond of the same size and characteristics can be purchased for approximately ₹40-50 thousand. That’s quite a difference!
As for resale value, as you might guess, lab-grown diamonds generally have a lower resale value compared to natural diamonds. Natural diamonds are often considered a store of value due to their rarity and limited supply, whereas lab-grown diamonds have an unlimited supply.
However, there’s more to consider—particularly when it comes to luxury jewellery, where psychology plays a significant role. Natural diamonds are often associated with tradition, luxury, and long-term value, making them popular for special occasions like weddings and engagements. Their emotional value and rarity contribute to their allure.
Lab-grown diamonds, in contrast, are affordable and sustainable, appealing more to younger, environmentally-conscious consumers who prioritize cost. They might be seen more as fashion items in the future.
So, what are the top jewellers doing to get a piece of this growing pie?
As mentioned earlier, Tanishq, the largest jewellery player, isn’t directly entering this space. However, here’s an interesting tidbit: Titan, the owner of Tanishq, invested $20 million in Great Heights Inc., a US-based company and the owner of the ‘Clean Origin’ lab-grown diamond brand. Perhaps this is Titan’s way of keeping a foot in the door and gaining insights into the growing LGD market.
Kalyan Jewellers, on the other hand, reports little to no demand for lab-grown diamonds. They’re also concerned about price instability—if lab-grown diamond prices drop significantly, it could damage customer trust in their brand.
Senco Gold is taking a different approach. They’ve launched a sub-brand and are conducting pilot tests in select stores to gauge consumer behaviour and response to lab-grown diamonds. In their latest earnings call, Senco Gold noted that while natural diamonds are seen as rare and luxurious, lab-grown diamonds are gaining traction, especially for larger stones, due to their lower price. They view lab-grown diamonds as more suitable for fashion and daily wear items where cost is a significant factor. Natural diamonds, however, remain preferred for special occasions like weddings.
On a lighter note, we came across this line today that sums it up pretty well: “Chemically speaking, diamonds are 100% carbon. Commercially speaking, they’re 100% marketing.”
Isn’t it fascinating how technology is shaking up even the most traditional industries? The diamond market is one to watch in the coming years!
Will PhonePe and Google start blocking users?
UPI is massive in India. Just last year, Indians made payments worth over ₹20 lakh crores using UPI! But there’s been some ongoing drama in this space.
On one side, we have the government, which is pushing to impose a 30% market share cap on third-party UPI apps. Their aim is to reduce concentration risk and encourage competition. On the other side, third-party UPI players like PhonePe and Google Pay are concerned that this cap will hinder their growth, even if they continue to offer the best user experiences.
And honestly, this seems like a valid concern.
The drama began in November 2020 when the NPCI (National Payments Corporation of India) proposed limiting the market share of a single app to 30%. Initially, they set a deadline of December 2022 to make a decision, but this was later extended by two years to December 2024.
So, why is the government doing this? The reason is that just two players, Google Pay and PhonePe, together control 85% of India’s UPI market! There’s also the concentration risk—if one app goes down, it could cause significant disruption, even though UPI payments are interoperable.
Additionally, both Google Pay and PhonePe are owned by foreign entities. Google Pay is owned by Google, which is registered in the US, and PhonePe is owned by Walmart, also based in the US. This means that US-based companies indirectly control 85% of UPI payments in India.
To promote more competition in the UPI space, the government wants to limit any single app’s market share to 30% of total UPI volumes in a quarter.
Now, how will this market share cap be enforced?
Well, Google Pay and PhonePe might have to stop accepting new users or even start rejecting payments. Alternatively, a new app would need to suddenly gain significant traction, which seems unlikely. If this regulation does come into effect, PhonePe will be the hardest hit since it currently holds about 50% of the market. What’s even more challenging for PhonePe is that they recently became operationally profitable and are planning an IPO.
However, this market share cap uncertainty seems to be dampening the company’s ambitious plans.
Speaking about PhonePe’s IPO plans, their founder, Sameer Nigam, mentioned:
“We cannot go public if there is uncertainty on the regulatory side. If you are buying a share at ₹100 and you price it assuming we have 48-49% market share, then there is uncertainty about whether it will come down to 30% and by when.”
The strangest part here is that while the government is trying to increase competition and support new players, these rules might actually have the opposite effect!
Think about it—if there’s so much uncertainty around the rules and regulations in an industry, new players are likely to be very cautious about investing big in this space, right?
Also, UPI payments are free, making it tough for companies to generate revenue unless they can use UPI as a gateway to other businesses.
Hopefully, this situation will resolve itself because we need more companies like PhonePe going public. Without such new-age companies listing, our markets will never deepen and offer investors exposure to innovative, native businesses.
With the deadline just a few months away, it will be interesting to see how this all plays out.
WazirX drama becomes more dramatic
Remember last month when a massive crypto attack hit one of the biggest cryptocurrency exchanges, WazirX? That attack resulted in the theft of approximately $230 million worth of digital assets from WazirX’s platform, making it one of the largest crypto thefts in history! In response, WazirX acknowledged the issue and temporarily suspended all withdrawals to protect its users’ assets.
A few days later, they announced a “socialized loss” strategy to address the issue. This strategy involved distributing the entire financial impact of the $230 million loss across all its users, regardless of whether they were directly affected by the attack or not.
The attack didn’t just hit individual crypto investors—it also impacted other corporations. CoinSwitch, another leading crypto exchange in India, reported that approximately 1% of their platform’s total assets were stuck on WazirX due to the hack. Despite multiple attempts to recover the funds, CoinSwitch was unsuccessful, leading them to decide to sue WazirX.
You might wonder why CoinSwitch had exposure on WazirX in the first place. It’s actually a backup measure to ensure seamless transactions for users in case of downtime or unforeseen errors on their platform. In CoinSwitch’s case, they held about 7% of their liquidity on other crypto exchanges for this purpose.
In a statement, CoinSwitch said:
“It’s been over a month since WazirX, a major crypto exchange operating in India, claimed that a cyber attack on their platform led to the theft of $230 million (~ ₹2000 crore) worth of funds. We have attempted to be in regular touch with WazirX since the day of the incident but have not been able to reach a solution to recover the funds that are stuck on their platform. Further, their announcement earlier this week is unclear about how a full recovery would happen.”
In response to this crisis, Zettai Pte Ltd, the Singapore-based holding company for WazirX, filed for a moratorium in the Singapore High Court.
But what does this actually mean?
Essentially, this legal move gives Zettai a 30-day breather during which they’re protected from any legal actions without the court’s approval. This grants them some extra time to figure out how to reorganize their finances.
This is quite a common strategy for companies facing financial difficulties. For WazirX users and crypto investors in India, this is definitely something to keep an eye on.
However, we’ll have to wait and see what happens next. We’ll share more updates as new information becomes available.
That’s it from us today, thank you for reading. Do share this with your friends and make them as smart as you are 
If you have any feedback do let us know in the comments.