While the restrictions are real, industry executives said their impact on actual gold
Demand is likely to be negligible because single investments of the size being restricted are very rare. The move is, therefore, largely a gesture of support for Prime Minister’s call to reduce pressure on India's external account. The issue was discussed at a meeting of top mutual fund chief executives with Sebi officials last week, where the regulator and industry executives explored whether any steps could."The industry discussions were around what could be done without impacting ordinary investors. Large players agreed that restricting very large lump-sum flows would be the most practical approach," said a person familiar with the matter. “There was no directive from Sebi. It was decision some of the leading players,” said one source.“The industry is mature and the move is in national interest and we need to act as responsible citizens of the country,” said a CEO of a leading mutual fund. The first move came from HDFC Mutual Fund, which announced restrictions on fresh subscriptions exceeding Rs 25 crore in its gold ETF (HDFC Gold ETF and HDFC Gold ETF Fund of Fund) offerings on Thursday. On Friday, the move was followed by ICICI Prudential Mutual Fund and Nippon India Mutual Fund, the country's largest gold ETF manager.
Industry sources said other fund houses, including Aditya Birla Sun Life Mutual Fund, Kotak AMC and several peers, are expected to announce similar measures in t... People familiar with the matter described the measures as largely symbolic. Single investments exceeding Rs 25 crore are extremely rare in gold ETFs, meaning the restrictions are unlikely to have any meaningful impact on actual inflows into the category. "The industry wanted to demonstrate support for the broader effort to reduce pressure on the currency without affecting retail participation," said a person familiar with the conversations. Another senior industry leader involved in the discussion said, “We will take a call on what needs to be done, if more needs to done.”
The move comes amid growing concerns over India's external account as higher crude oil prices and strong gold imports add to dollar demand. On May 10, Prime Minister Narendra Modi urged citizens to defer gold purchases for a year to help conserve foreign exchange. "If possible, postpone the purchase of gold for one year," Modi said, while also asking citizens to defer overseas vacations as part of a broader effort to reduce pressure on the country's external account.
Gold ETFs have emerged as one of the fastest-growing segments of the mutual fund industry over the past year as investors sought protection against geopolitical uncertainty, currency volatility and rising gold prices. Gold and Silver ETFs as a category peaked in 2026 with AUM topping Rs 3 lakh crore. Thereafter, the 25% correction in the price of precious metals has significantly reduced demand. Monthly flows now stand at Rs 3,040 crore ( as of April 2026) compared to the peak of Rs 24,039 crore.
