The widely used liquid crystal (LC) projection display based on rotation of polarization has some disadvantages, such as significant (about 50%) loss of the unpolarized light on an input polarizer and a limited contrast ratio. The drivable LC phase diffraction grating, embedded in the Schlieren system as a spatial light modulator, is introduced as the alternative to a conventional LC light valve. The phase grating produced by a pattern alignment of the LC enables the construction of an LC diffractive modulator, which is independent from the polarization of the incident light. The LC phase diffraction grating redirects light passing through rather than absorbing light. The LC phase diffractive grating is potentially able to transform all incident light, at the ON state of the modulator, into diffractive maximums with no light in the zero-diffraction order. This enables the construction of an LC diffractive modulator with more modulation efficiency than the conventional LC light valve. Therefore, a model of the nematic LC diffractive phase grating is proposed. This model is based on an approximation for a retarded electrical field of diffracted radiation. The presented model is developed to optimize parameters of the LC light diffractive modulator to achieve maximum efficiency.