Hong Kong became India’s largest lab-grown export market FY26

Hong Kong became India’s largest lab-grown diamond export market in FY26, receiving Rs 3,674.5 crore of lab-grown diamonds, or LGDs. Hong Kong accounted for 37% of India’s FY26 LGD exports, ahead of the United States at 25%, reversing the United States-led export pattern reported for FY22.

How did Hong Kong become India’s largest lab-grown export market in FY26?

Hong Kong became India’s largest lab-grown export market in FY26 as shipments to Hong Kong increased while exports to the United States declined. India exported Rs 3,674.5 crore of LGDs to Hong Kong in FY26, compared with Rs 1,742 crore in FY25. Exports to the United States fell to Rs 2,472 crore in FY26 from Rs 5,713.4 crore in FY25.

The FY26 ranking represented a reversal from FY25. Hong Kong’s FY26 export value was about 1.5 times the United States value, whereas United States shipments in FY25 were about 3.3 times Hong Kong shipments. The change was therefore driven by both a Rs 1,932.5 crore increase in Hong Kong exports and a Rs 3,241.4 crore decline in United States exports.

The wider diamond trade environment provides context but does not establish a country-specific cause for the LGD shift. The reported cut-and-polished diamond export data identify weak demand in major markets including the United States and China, citing subdued discretionary spending and consumer preference for LGDs. That explanation applies to the broader cut-and-polished diamond segment, rather than directly attributing the movement in individual LGD destination markets.

How concentrated were India’s LGD exports in FY26?

India’s LGD exports remained concentrated in FY26 even after Hong Kong became the leading destination. Hong Kong accounted for 37% of exports and the United States represented 25%, placing 62% of FY26 LGD exports in the two largest markets. The United Arab Emirates accounted for 13%, while all remaining markets together represented 25%.

The distribution was less dependent on the United States than in FY22. The United States accounted for 67% of India’s LGD exports in FY22, followed by Hong Kong at 14% and the United Arab Emirates at 10%. By FY26, the United States share had declined by 42 percentage points, Hong Kong’s share had increased by 23 percentage points and the United Arab Emirates share had increased by 3 percentage points.

The change created a broader set of destination markets but also transferred the largest single-market exposure to Hong Kong. For this structure to persist, Hong Kong would need to retain its 37% share or continue receiving more LGD shipments than the United States. A recovery in United States demand, or a reduction in Hong Kong orders, could alter the ranking because the two markets still accounted for nearly two-thirds of FY26 exports.

Which markets added to India’s regional LGD export mix?

Hong Kong supplied the largest increase in reported LGD export value in FY26, but several smaller markets also expanded. The “Others” category rose to Rs 1,008 crore in FY26 from Rs 414.3 crore in FY25. Israel increased to Rs 347.4 crore from Rs 230.3 crore, Thailand to Rs 281.2 crore from Rs 134 crore, and Belgium to Rs 296.1 crore from Rs 129.8 crore.

Korea R.P. appeared as a reported destination with Rs 219.4 crore of FY26 exports after no FY25 value was listed. China P.R.P. received Rs 235.1 crore in FY26 and the United Kingdom received Rs 200.4 crore. These markets were each materially smaller than Hong Kong, but their presence fits the reported FY26 destination mix, in which China P.R.P. and Korea R.P. each held 2%, while the United Kingdom, Thailand and Belgium each held 3%.

The United Arab Emirates remained the third-largest FY26 destination at Rs 1,278.6 crore, despite a decline from Rs 1,754.9 crore in FY25. Its 13% FY26 share was higher than its 10% FY22 share, showing that share changes can result from movements in other destinations as well as from changes in a market’s own shipment value. The United Arab Emirates is also described as a trading and re-export hub, with Dubai’s infrastructure and free zones supporting access to markets in the Middle East, Africa and beyond.

What does the Hong Kong shift mean for India’s overall LGD trade?

The Hong Kong shift was a change in destination geography rather than an increase in India’s total annual LGD exports. Aggregate LGD exports reached Rs 13,486.9 crore in FY23, then declined to Rs 11,612.36 crore in FY24, Rs 10,211.15 crore in FY25 and Rs 10,011.29 crore in FY26. FY26 exports were Rs 199.86 crore lower than FY25, even as Hong Kong shipments rose substantially.

India’s LGD imports were considerably lower than exports across the reported period. FY26 imports were Rs 788.9 crore against LGD exports of Rs 10,011.29 crore. The import data are linked to raw material for processing and manufacturing, while India’s cutting, polishing, grading and certification capabilities support exports of polished diamonds and semi-finished jewellery.

India’s manufacturing position rests on a diamond-processing ecosystem centred on Surat and Mumbai. India accounts for about 90% of global rough diamond cutting and polishing by volume in the natural diamond industry, and that processing base also supports LGD value addition. LGDs are produced using Chemical Vapor Deposition, or CVD, and High Pressure High Temperature, or HPHT, processes, before cutting, polishing and certification for jewellery and export markets.

What could support further diversification beyond Hong Kong?

The disclosed market-development approach identifies the Middle East as a prospective export region, particularly the Gulf Cooperation Council markets of the United Arab Emirates, Saudi Arabia, Qatar and Kuwait. The proposed approach includes business-to-business supply of certified polished LGDs and semi-finished jewellery to regional jewellers and distributors. It also includes direct retail boutiques and online strategies designed for regional consumers.

The Middle East plan depends on converting a stated market opportunity into orders, rather than merely using the United Arab Emirates as a re-export channel. The source identifies high disposable income, luxury spending, gifting and demand for gold and diamond jewellery as regional characteristics. It also identifies younger consumers’ interest in sustainability, innovation and modernity as factors that could support LGD demand.

Policy changes may affect the wider cost setting for diamond processing. The Union Budget 2022-23 reduced Basic Customs Duty, or BCD, on cut and polished diamonds and gemstones from 7.5% to 5%, and the Union Budget 2026-27 reduced the rate from 5% to 2.5%. These measures concern cut and polished diamonds and gemstones, rather than a stated LGD-only duty, but the reported intention is to improve cost competitiveness and support India’s position in diamond processing and jewellery manufacturing.

Conclusion

Hong Kong’s FY26 leadership changed India’s LGD export hierarchy: it received Rs 3,674.5 crore and held a 37% share, while the United States received Rs 2,472 crore and held a 25% share. The export base became less reliant on the United States than in FY22, but Hong Kong and the United States still represented 62% of FY26 LGD exports, leaving material exposure to two destinations.

The next development to watch is whether the disclosed Middle East strategy increases shipments through the United Arab Emirates and other Gulf Cooperation Council markets. United Arab Emirates exports declined by Rs 476.3 crore in FY26, so broader diversification would require the planned certified-stone supply, regional distribution and consumer-facing retail initiatives to translate into export demand.