By Swansy Afonso

Shares of jewellers climbed in India after the government withdrew an order that brought the industry under anti money-laundering legislation, a move that comes just as gold buying improves before the Hindu festival of Diwali, the peak season for demand.

Jewellers were included in the Prevention of Money-Laundering Act in August, increasing compliance requirements. Buyers have been shying away from making purchases as they had to provide their income tax identity for transactions above 50,000 rupees ($766), hindering high-value deals.

Titan Co. advanced as much as 5.7 per cent to 630.40 rupees in Mumbai, the biggest jump since Aug. 4, while Tribhovandas Bhimji Zaveri Ltd. was up 8.1 per cent and Gitanjali Gems Ltd. added 6.9 per cent.

While rescinding the earlier ruling, the government said a separate notice would be issued after consideration of points raised through discussions with stakeholders. India also slashed tax rates on 27 items, and extended the period for small businesses to file returns, in a bid to reverse the blow to growth stemming from a chaotic roll out of the nationwide sales tax.

The laundering curbs, as well as the new sales and goods tax and rising prices, were dulling expectations for jewelry demand during the peak buying period before Diwali, the festival of lights, that falls on Oct. 19 this year.

But, with the scrapping of the compliance rules, sales may now pick up, providing relief to jewellers, according to Nitin Khandelwal, chairman of the All India Gems & Jewellery Trade Federation. "We will see the mid-sized, high-value purchases coming in now and sales will be better-than-expected during Diwali and the wedding season after that."