In what came as a surprise move for most, the 80:20 Scheme, as it has come to be well-known, was scrapped on Friday November 28th. A circular from the RBI stated quite baldly and without explanation:  “It has been decided by the Government of India to withdraw the 20:80 scheme and restrictions placed on import of gold”.

 “The withdrawal of this scheme is good for the industry and good for the country,” commented Colin Shah, Convener of the Jewellery Panel Committee of the GJEPC. “The smuggling will stop and it will introduce transparency.”

The Scheme was introduced in August 2013 to reduce the Current Account Deficit (CAD). While imports of gold did  reduce significantly and the position on CAD improved, industry insiders opine that there was a lot of smuggling taking place to fulfil local demand. The easing of norms by allowing recognised Star Trading Houses and Premium Trading Houses to import gold under the 80:20 scheme, had also raised some concerns, particularly  in the last few months when imports of gold spiralled.

Whether the 80:20 Scheme will be replaced by some other, or whether jewellers will be allowed  to import gold freely  - “pay the duty and import”, as one person from the jewellery industry put it – is not quite clear.

Industry insiders feel that it is likely that the government will watch the gold import trends for a few months and their impact on CAD before taking the next step.

For the moment however, the jewellery industry views the withdrawal of the 80:20 Scheme as a positive step.