India’s ETF market expands as gold, silver and equity funds drive growth

Ketaan Ram Kataria reports from New Delhi that India’s ETF market is undergoing a significant transformation, with rising investor participation, growing demand for precious metals and intensifying competition among asset managers reshaping the country’s investment landscape.

Assets under management (AUM) in Indian ETFs have grown sharply over the past decade, reflecting a broader shift towards passive investing. These funds, which track market indices, commodities or baskets of securities, offer investors a relatively low-cost way to diversify portfolios without having to select individual securities.

“The ETF market in India is moving beyond its traditional focus on benchmark equity indices. Investors are increasingly using these products to diversify their portfolios, manage risk and gain exposure to different asset classes,” said a market analyst familiar with developments in the sector.

India’s ETF assets increased from approximately Rs 5,400 crore in December 2014 to nearly Rs 10 lakh crore, equivalent to about USD108 billion, by early 2026. The wider passive investment industry, which also includes index mutual funds, has expanded considerably, reflecting growing interest in rules-based investment strategies.

Gold and silver emerge as key growth drivers

Gold and silver ETFs have become prominent contributors to trading activity as investors seek exposure to precious metals without the costs and logistical challenges associated with holding physical bullion.

Combined, gold and silver ETFs accounted for nearly 60 per cent of average daily ETF turnover during the 2025–26 financial year. Average daily turnover across ETFs rose from approximately Rs 237 crore in FY2021 to Rs 4,577 crore in FY2026, equivalent to around USD25 million and USD492 million, respectively.

Gold ETFs also recorded substantial investor inflows in early 2026. Net investments reached approximately Rs 24,040 crore, or USD2.59 billion, in January, reflecting heightened interest in gold as a portfolio diversification instrument.

“Gold and silver ETFs have become increasingly accessible to investors who want exposure to precious metals without physically holding them. Their popularity also reflects the role these assets can play during periods of market uncertainty,” says an investment industry executive.

However, analysts caution that precious-metal ETFs are not risk-free. Their performance depends on underlying commodity prices, currency movements and broader global economic conditions. Sharp changes in international gold and silver prices can translate into significant fluctuations in fund values.

Equity ETFs attract broader investor interest

Equity ETFs tracking major indices such as the Nifty 50 and BSE Sensex continue to form a core part of India’s passive investment market. These products provide exposure to leading listed companies and generally have lower management costs than actively managed funds.

The range of available products is also expanding, with investors gaining access to mid-cap and small-cap stocks, as well as sectors such as healthcare, defence and technology.

The expansion of thematic ETFs reflects a growing appetite for targeted investment strategies. While these products allow investors to focus on particular industries, their concentrated exposure can also increase volatility and amplify losses when a sector underperforms.

Debt ETFs, which invest in fixed-income securities such as government and corporate bonds, offer another route for investors seeking exposure beyond equities. However, demand has been uneven, with equity-orientated products attracting renewed interest during parts of 2026.

“The next phase of ETF growth will depend on whether fund providers can combine competitive pricing with sufficient liquidity and products that meet the needs of different categories of investors,” says a financial markets specialist.

Competition intensifies as new players enter

·       Jio Financial Services and BlackRock expanded their presence in India’s passive investment market with the launch of the Jio & BlackRock Nifty 50 ETF in August 2026. The fund tracks the Nifty 50 Index, offering investors exposure to 50 leading Indian companies through a single ETP.

·       Invesco Mutual Fund has launched the Invesco India Silver ETF, an open-ended scheme tracking physical silver prices, subject to tracking error. The NFO opened on October 27 and closes on November 9, 2026. The minimum investment is USD54, with subsequent investments in multiples of USD0.01. The scheme has no entry or exits load and will be benchmarked against silver prices. Abhisek Bahinipati will manage the fund.

·       Mirae Asset Mutual Fund is broadening its ETF portfolio through sector-focused healthcare and infrastructure products, alongside hybrid strategies, as asset managers seek to diversify investor offerings amid growing competition in India’s passive investment segment.

Regulatory changes target trading efficiency

Regulatory developments have also become an important part of the market’s evolution. Changes introduced by India’s securities regulator in 2026 addressed ETF base prices, price bands, pre-open call auctions and close-out procedures.

The measures are intended to improve the functioning of ETF trading, particularly for products whose underlying assets may experience substantial price movements outside domestic market hours.

One important consideration is the relationship between an ETF’s market price and its net asset value. Depending on supply, demand and liquidity, an ETF can trade at a premium or discount to the value of its underlying holdings.

“Improving market mechanisms is important as ETF trading volumes increase. Investors also need to understand that exchange-traded products remain exposed to liquidity and market risks, even when their underlying investments are diversified,” said a market participant.

Outlook remains positive, but risks persist

Some ETFs trade actively, while smaller products can experience limited liquidity and wider bid-ask spreads. Investor education is another priority, particularly regarding tracking error, expense ratios and the risks associated with concentrated sector or commodity exposure.

Market participants expect continued growth as awareness of passive investing increases and asset managers introduce new products.

However, the expansion of assets under management alone will not determine the sector’s long-term success.

India’s ETF industry is increasingly becoming a mainstream component of the country’s investment ecosystem. Its future growth will depend on transparent pricing, efficient trading, competitive fees and investors’ ability to select products suited to their financial objectives and risk tolerance.