The industry has raised over 100 million rupees for the lab through voluntary contributions of a quarter of a percent of the value of gem sales.
"If we say that Sri Lankan stones are natural stones, we need to back that up with scientific proof," Ellawala told LBO in an interview.
"There has been a serious erosion of consumer confidence in gems, particularly sapphires, because of the number of treatments that have been published.
"So a lab certification programme should boost consumer confidence. It will help us to sell more gems and get better prices."
Sending gem stones abroad for such certification is both costly and time consuming.
Ellawala said treatment of stones was itself acceptable, but that non-disclosure of treatment was a threat to the trade, because of the potential ill-effects of radiation.
Stones are treated to enhance their appearance.
Natural stones fetch substantially higher prices than treated stones, so non-disclosure means buyers are cheated.
Stones that are radiation-treated are discounted the most, followed by ones subject to diffusion treatment, and thermally treated stones the least discounted.
Sri Lanka has long been known for its gem stones, especially blue sapphires which are sought after by consumers in Western markets.
"A lot of stones in the market have been subject to some kind of treatment, especially sapphires" Ellawala said.
"But Sri Lanka is probably the best source in the world that produces stones that need not be treated. We have natural gems like sapphires."
The island's sapphires have defining characteristics, such as appearance, that are more desirable from a consumer point of view than stones from elsewhere such as Australia and the US, he said.
Treatment of gem stones has been growing over the years and lab techniques are used to detect it in consuming countries.
But such laboratory techniques are not available in Sri Lanka right now and the equipment is sophisticated and needs a lot of investment.
"We realised the need for it 10 years ago and asked the government to set up a facility to determine treatment," said Ellawala. "The government wanted the industry to invest and was willing to provide matching investment – match it one for one.
"So, exporters decided to collect a quarter percent from the value of gem sales with the National Gem and Jewellery Authority collecting the money at the point of sale."
But a dispute over who should implement the project – government or private sector - caused delays.
The industry felt it should implement the project as it has the commercial skills and expertise.
"We felt we're more competent as it is a commercial operation and we contributed the lion's share of the funds," Ellawala said.
Government ministries and agencies and the trade have now agreed that the association should be the implementing agency and that it should be private-sector driven, with some participation of the state."Hopefully, in the next three months we should incorporate a company and implement the project," Ellawala said.