Consumers in India are losing as much as upto Rs 8,000 crore (Rs 80 billion) annually due to the questionable quality of gold and there is an urgent need for consumer protection in this area, said former RBI deputy governor, SS Tarapore, in his keynote speech at the London Bullion Market Association -- Indian Bullion Market Development Forum.

The poor quality of gold sold in India throws up need for a gold Ombudsman for consumer complaints.

Customs levy of Rs 250 per gram needs to be removed. Gold needs to be treated like dollar, yen or sterling, not like other metals.

Total freeing of gold import-export trade and abolition of import duty on gold was a pre-condition for meaningful capital account convertibility, he added.

Tarapore said the government should allow banks to trade on bullion exchanges to create the right environment.

Also, facility of imports by individual non resident Indians should end. This would help  curb money laundering. Gold should be part of baggage of returning to India and subject to customs duty.

"The October 2002 RBI measure to merge forex and gold open positions is a step in the right direction. There is an urgent need to bring bullion banks and non-bank entities trading in gold on a level playing field," said Tarapore.