CCPA to release framework on natural and lab-grown diamonds

The Central Consumer Protection Authority (CCPA) will soon release a framework to ensure transparency, accountability, and consumer protection across the diamond industry.

CCPA organised a stakeholder consultation on consumer protection in the diamond sector to deliberate on the use of appropriate terminology for diamonds.

The consultation, chaired by Nidhi Khare, chief commissioner, Central Consumer Protection Authority (CCPA), addressed critical concerns regarding the lack of standardised terminology and inadequate disclosure practices in the diamond sector. These gaps have resulted in consumer confusion and misleading practices, especially concerning the differentiation between natural diamonds and lab-grown diamonds.

The industry consensus emphasised the need for ethical marketing practices and consistent terminology to enhance consumer protection. Comprehensive guidelines were proposed to mandate: Explicit labelling and certification of all diamonds, specifying their origin and production method; prohibition of misleading terms like “natural” or “genuine” for lab-grown products; and accreditation systems to regulate and standardise diamond testing laboratories, curbing the rise of unregulated entities.

During the consultation the broad key aspects and prevailing Legal and Regulatory frameworks were discussed. For example, the Legal Metrology Act, 2009, under Section 12, provides the unit of mass for diamonds, pearls, and precious stones as the carat (symbol: c), equivalent to 200 milligrams or one five-thousandth of a kilogram, ensuring standardised measurements for consistency in commercial transactions across the diamond industry.

And, the Bureau of Indian Standards (BIS) Standard IS 15766:2007 mandates that the term "diamond" alone must exclusively refer to natural diamonds. Synthetic diamonds cannot be labeled as "diamond" without qualification and must be explicitly referred to as “synthetic diamonds,” irrespective of the production method or material used. To maintain market clarity, synthetic diamonds are also prohibited from being graded alongside natural diamonds.

Under the Consumer Protection Act, 2019, a robust legal framework to safeguard consumer interests by preventing unfair trade practices and ensuring transparent labeling in the diamond industry is provided. Which prohibits misleading descriptions or omissions that may confuse consumers.

Further, Central Board in Direct Taxes and Custom (CBIC) reinforced these measures, by Circular No. 21/2024, dated October 30, 2024, mandating the explicit declaration of whether a diamond is natural or lab-grown, and if lab-grown, the production method—Chemical Vapor Deposition (CVD), High Pressure High Temperature (HPHT), or others—must be specified to ensure transparency and accountability in the diamond sector.