Until early this month, Indian jewelers expected the traditional surge in demand from the Hindu Festival of Lights in October to be muted. The gold industry was struggling to cope with a slump in sales caused by a government crackdown on the black market, and efforts to increase financial transparency. In August, jewelers were dealt a fresh blow by a decision to bring them under the Prevention of Money Laundering Act - a move they likened to being bracketed with those selling arms and ammunition. Vigorous lobbying persuaded the government to reverse the decision, freeing customers from a requirement to provide their tax identity for every purchase above 50,000 rupees ($771). While the move will be reviewed, the backtrack lifted the mood and brought a positive change in sentiment before Diwali this week, according to Metals Focus Ltd. \u201cIt\u2019s a good thing for the market that there\u2019s a government who is ready to listen,\u201d said Chirag Sheth, a Mumbai-based analyst at the precious metals research firm. \u201cThe implementation of the rule was cumbersome for the trade.\u201d Purchases in the two weeks that run up to the Dhanteras festival on Oct. 17, two days before Diwali, usually total 20 to 30 metric tons and they may now be higher because of this latest shot in the arm, he said. Dhanteras is the biggest and most auspicious day of the year to buy gold. While the three months through September were a \u201cwashout\u201d in terms of demand, with the money laundering curbs damping purchases during the seasonal monsoon, sales for the full year are seen recovering 5 percent to about 700 tons from 2016, said Sheth. Last year was the worst for demand since 2009. Shares of jewelers climbed in Mumbai on Monday. Titan Co. added almost 1 percent to 631 rupees, Gitanjali Gems Ltd. was up as much as 1.9 percent and Tribhovandas Bhimji Zaveri Ltd. gained 1.6 percent. But clouds over the Indian gold industry haven\u2019t been swept away entirely, and will almost certainly be a subject of discussion at the London Bullion Market Association conference in Barcelona, also taking place this week. Strict Records \u201cThe 50,000 rupees limit has been removed by the government, but we are again waiting as they may come out with a new ceiling,\u201d said Ketan Shroff, joint secretary at the India Bullion and Jewellers Association Ltd. The industry has been spooked by repeated government interventions, and jewelers will have to be strict at maintaining records of sales \u201cbecause the scrutiny may come anytime at a later stage,\u201d he said. Prime Minister Narendra Modi last year banned higher denomination notes to bring unaccounted cash back into the system, introduced tougher proof of identity for purchases, capped the amount of cash used in transactions and introduced a new national goods and services tax in July. Adapting to these changes have kept buyers and the industry busy. \u201cConsumers have had to contend with a hell of a lot of changes in the last year,\u201d Simona Gambarini, a commodities economist in London at Capital Economics Ltd., said by phone from London. \u201cModi seems to be introducing new regulations every month. It\u2019s bound to impact demand.\u201d Buyers like Swapnali Kansara, a 43-year-old airline employee in Mumbai, now insist on receipts for their purchases. \u201cI keep all my bills because you never know when you will be asked to show them to the authorities.\u201d Gold Coins Kansara has been buying gold coins or jewelry during the festival season for years, a tradition she shares with many Indians. \u201cWhile my husband considers it a dead investment because we never sell our gold, he lets me buy every year because he knows of my love for it.\u201d Indians will continue to make their traditional token purchases, Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities Ltd., said from Hyderabad. Galipelli himself will be queuing up on Dhanteras to pick up gold coins for his wife. \u201cI am looking at a comfortable 20 percent appreciation in prices over the next year,\u201d and the current levels are right for investors to buy, he said. Gold prices in India are down about 8 percent from last year\u2019s high. As for Barcelona, an overlap with the busiest period in the calendar for the Indian industry has seen many participants skipping the LBMA conference this year. \u201cLooks a bit difficult for everybody this time because of Diwali,\u201d said Saurabh Gadgil, chairman of Pune PN Gadgil Jewellers Pvt Ltd., who has attended for several years, but will be absent this time.