"The removal of the 80:20 scheme is a welcome development and one that reflects previous statements from the RBI and the government that gold curbs are meant to be short term. The timing of this development though surprising, will definitely boost confidence in general, and in the jewellery industry, in particular," he said.

WGC stated that it will maintain its expectations for demand in 2014 to be within a range of 850-950 tonnes, slightly lower than last year. "It has been decided by the government of India to withdraw the 20:80 scheme and restrictions placed on import of gold.

 Accordingly, all instructions issued about the scheme from time to time starting with A.P. (DIR Series) Circular No.25 dated Aug 14, 2013 stand withdrawn with immediate effect," the Reserve Bank of India (RBI) said in a notification late evening on Friday.

Under the scheme, 20 percent of the imported gold had to be exported before getting a new lot. The scheme was put in place in August 2013 to curb gold imports, which was considered a major cause for the widening current account deficit of the country.

"Sharp import hikes in recent months were not triggered by changes in demand estimates but more likely to be as a result of an expectation of additional curbs. The official supply situation must now ease to benefit genuine exporters and manufacturers of gold jewellery," Somasundaram said.

"Discussions on gold in India must move beyond curbs and focus on how this industry can fulfill its vision to make a major contribution to the country's prosperity in the next five years. India should support this vision by creating a favourable eco system that deals with gold as a fungible asset category, reflecting its cultural and economic significance.

 "It is imperative that we find ways of mobilising and monetising the household savings imbedded in gold stocks through the formal financial sector for the benefit of the economy as a whole. Its time to re-engage all stakeholders to develop a coherent long term policy on gold that is aligned to the nation's growth objectives"he added.

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