The next wave of buyers: How Tier 2 and Tier 3 consumers are driving natural diamond growth

Even as India’s Tier 2 and Tier 3 cities begin to drive India’s retail market—especially its premium and luxury segments—the country’s diamond jewellery market has found an able ally in these regions. If Starbucks has about 500 stores in India, Rolex has a franchisee in Kochi, Zara can be found in Lucknow, their presence shows a structural shift in consumption: from large metropolitan centres to smaller yet affluent towns.

According to the FICCI – Indian Retail & Consumer reports and Local Circles Surveys, nearly 90 per cent of India buys some lifestyle product in a year, either offline, online or using both platforms. India’s luxury market, which includes items such as jewellery, watches, and apparel, according to a Kearney report from last year, is projected to approach USD 12 billion by 2028.

Rising incomes, wider retail penetration and changing buyer priorities contribute to the overall market expansion. This appetite for luxury, driven by aspirations and access, is not just restricted to metros, nor is it limited to bags and cars.


Industry estimates indicate that non-metro markets now account for nearly 60–65 per cent of total jewellery sales in India. Within this segment, diamond jewellery demand is growing at an annual rate of 15–20 per cent, based on inputs from organised retail partners. Recent industry reporting has also pointed to smaller cities playing a key role in pushing this growth.

This trend is closely linked to economic developments across Tier 2 and Tier 3 towns. Growth in services, trade, manufacturing and small enterprises has improved household incomes and financial stability. Discretionary spending is rising, with consumers prioritising purchases that offer durability, credibility and long-term relevance.

The preferences and buying power of millennials and Gen Z consumers are placed by Deloitte-FICCI reports at USD 250 billion in direct spending. In fact, De Beers’s fifth annual Diamond Insight Report found that millennials and Gen Z accounted for two-thirds of global diamond jewellery sales.

For many people, diamond jewellery is a symbol of progress, social ascension, the equivalent of buying a holiday home or a yacht. While purchases are usually linked to big events, such as weddings, anniversaries or family milestones, some professional achievements can also trigger similar outcomes. The establishment of a business, the start of a startup, a promotion, or the achievement of a sales target, for example, can lead to a high-value buy. In these contexts, diamonds function as a financial asset and as a social marker.

Families continue to influence these decisions, which are not always easy given the high values involved. Buying jewellery, or diamonds, in India, especially in smaller cities, is usually a collective process, involving elders and extended family members.

Given the inherently suspicious nature of the Indian buyer, especially for high-value objects, certification, clarity on quality, and assurance of origins are critical. This is especially true of significant purchases, such as diamonds, which form a substantial share of household savings. Natural diamonds, now supported by grading systems and standardised retail practices, meet these expectations in (pun intended) all their shining glory.

While lab-grown diamonds are getting popular due to lower costs, retailers note that buyers distinguish between everyday jewellery and those that are meant to mark significant events. For weddings, for instance, natural diamonds remain the preferred choice, driven by perceptions around value and legacy and to offer a suitable response to a pesky relative.

Over the past decade and more, organised jewellery brands have an increasingly visible presence across non-metro towns such as Jaipur, Indore, Coimbatore, and Kochi, among others. In the process, they have taken over from fragmented local supply with structured retail formats. These stores offer transparent pricing, standardisation, certification, and post-purchase services, reducing stress for first-time diamond buyers.

The internet has democratised this field as well. Consumers can research products online before entering stores, using social media and other digital platforms, to compare designs and prices. In India, aspirations are driven by celebrities and leading jewellery brands and retailers have catered to that by getting movie stars to endorse their products. Access to information has closed the knowledge gap between metro and non-metro buyers.

India’s global share of natural diamond consumption has also expanded dramatically, from just two per cent a couple of decades ago to nearly 11 per cent now, according to various reports. This makes India the second-largest market for natural diamonds, second only to the United States, which still holds approximately 55 per cent of global sales.

Buyers in Tier 2 and Tier 3 cities are also categorising jewellery purchases as part of long-term financial planning. Diamonds are passed down to generations as heirlooms, reinforcing their symbolic value as part of the family legacy. Natural diamonds fit well with cultural practices of inheritance and asset preservation.

While aspirations in smaller cities mirror those in the bigger cities, the criteria for assessing value differ. Buyers tend to prioritise longevity, authenticity and resale value over novelty or price-led considerations.

Following the demand and market trend, jewellery brands are recalibrating growth strategies to focus on these Tier 2, Tier 3 regions, investing in awareness, customer engagement, and building long-term relationships.

As India’s consumption base continues to widen, the influence of non-metro markets on the diamond industry is expected to increase further. The rise in natural diamond purchases from Tier 2 and Tier 3 cities reflects a blend of aspiration, financial discipline and cultural continuity. Together, they are positioning smaller cities as the cornerstone of the next phase of growth in India’s diamond jewellery market.

Disclaimer: Information and images by Natural Diamond Council.