To curb a record trade deficit, India imposed an import duty of 10 percent on gold, and tied imports for domestic consumption to exports, creating scarce supply of the yellow metal and boosting premiums to a record.
As a result, Indians have depended heavily on old heirlooms and smuggled yellow metal to meet wedding demand.
"Year 2014 seems to be a difficult one for the Indian gem and jewellery industry so far as gold imports are concerned," Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation (GJF), said in an interview at the Reuters Global Gold Forum.
India, which may import a lower-than-usual 700-750 tonnes in 2013, is unlikely to ease its import policy or the customs duty until the trade deficit is under control, Bamalwa added.
"Demand (for) jewellery has not yet picked up, so the industry is not yet in panic, but I am not (very) sure about the future - say, after 30 days," said Bamalwa.
The World Gold Council (WGC) cut its forecast for Indian gold demand earlier this month, predicting the country could also lose its crown as the world's biggest consumer of bullion to China.
The WGC said Indian demand could be 900 tonnes in 2013, from its previous forecast of 1,000 tonnes.
Fourth-quarter demand is expected to be low because consumers brought forward wedding purchases to April and May, when gold prices fell drastically, Bamalwa said.
Premiums for gold in India climbed to a record $160 an ounce above spot prices this week. By the end of the quarter, they may have risen as high as $200 an ounce, Bamalwa said.
SPOTLIGHT ON EXPORTS
Under the Indian government's new rules, gold importers must export 20 percent of their total imports. Importing agencies such as banks and state-run companies can bring in a maximum of two consignments of metal before having to furnish proof of exports, he said.
Jewellers are trying to increase exports but the global economic situation is "not very encouraging", Bamalwa said.
Jewellery exports, on which domestic imports are dependent under the new rule, have slid nearly 55 percent to $3.95 billion so far this fiscal year, from April to October.
Falling exports will have a knock-on effect on future imports because of the ties between the two, which in turn will hurt domestic jewellers who should be seeing surging demand as the wedding season gets into full swing.
The trade body plans to approach the government to provide low-cost finance to jewellery exporters, against a 12-13 percent funding cost now. Its global competitors get financing at 2-3 percent.
"We will be approaching the government for some incentives, but since the country is going for general elections next year, the incentives may not come before the next government comes to power," Bamalwa said. Elections are due in May in India, the world's second-most populous country.
Bamalwa said the government was "in no mood" to relax its new import duty rules, or its gold export requirements, until the current account deficit had been reined in.