Government to release framework for consumer protection in the diamond industry

Natural vs lab-grown: The new framework aims to ensure transparency and ethical practices in India’s diamond sector

The Indian government announced on Tuesday that it will soon unveil a comprehensive framework aimed at ensuring transparency, accountability, and consumer protection within the diamond industry. This move follows a consultation led by the Central Consumer Protection Authority (CCPA) under the Ministry of Consumer Affairs, which gathered key stakeholders to address critical issues affecting consumers in the sector.

The consultation highlighted significant concerns regarding the lack of standardized terminology and inadequate disclosure practices in the diamond market. One of the major points raised by industry players was the confusion surrounding the distinction between natural and lab-grown diamonds, which has led to misleading marketing and consumer misunderstandings.

“These gaps in the market have resulted in consumer confusion, especially when it comes to differentiating between natural and lab-grown diamonds,” said Nidhi Khare, Chief Commissioner of the CCPA, who chaired the meeting. Stakeholders emphasized the need for clear and consistent terminology to ensure consumers are not misled.

The meeting also addressed the current legal and regulatory frameworks that govern the diamond industry. For instance, the Legal Metrology Act, of 2009, specifies that diamonds, pearls, and precious stones must be weighed in carats, which are standardized at 200 milligrams, ensuring consistency in commercial transactions.

Additionally, the Bureau of Indian Standards (BIS) mandates that the term “diamond” should only apply to natural diamonds. Synthetic diamonds, which are grown in labs, cannot be marketed simply as “diamonds” and must be explicitly labeled as “synthetic diamonds.”

The regulation also stipulates that synthetic diamonds cannot be graded alongside natural diamonds, maintaining market clarity and preventing misleading comparisons.

The CCPA emphasized the importance of ethical marketing and the consistent use of terminology to enhance consumer protection. In line with this, the government will soon release a robust consumer protection framework under the Consumer Protection Act, 2019, which aims to safeguard consumers from unfair trade practices and ensure transparent labelling in the diamond industry. The law prohibits misleading descriptions and omissions that could confuse buyers.

In a related development, the Gems and Jewellery Export Promotion Council (GJEPC) reported that India’s gross export of cut and polished diamonds rose by 11.32% in October 2024, reaching Rs.11,795.83 crore, up from Rs.10,495.06 crore in the same month last year.

However, the gross imports of rough diamonds saw a decline of 24.3%, falling to Rs.53,733.31 crore in October, compared to Rs.70,061.18 crore in the previous year.

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