The National Stock Exchange of India (NSE) officially launched live trading in its Electronic Gold Receipts (EGR) segment on May 18, 2025, marking a major milestone in digitised gold trading. According to the exchange, live trading began after a successful mock trading session conducted on May 16, with the EGR product receiving strong response from market participants and the broader bullion ecosystem. At present, vaulting and collection centres are operational in Ahmedabad and Mumbai, while four additional centres in Delhi, Kolkata, Chennai and Bengaluru have become operational effective Monday. The NSE stated that the network will continue expanding in phases and is expected to eventually cover nearly 120 centres across the country. The launch aims to deepen India's bullion market and improve transparency in gold pricing, with the broader aim to create a transparent, regulated and efficient gold trading ecosystem while gradually helping India emerge as a global price setter in the bullion market.
In India, gold has long occupied a special place in household finances, often driven as much by tradition as by investment logic. Whether bought during Dhanteras, gifted at weddings or accumulated as protection against inflation, gold continues to serve as a symbol of security for millions of families. However, owning physical gold is not without its drawbacks, including steep making charges, purity doubts, and constant worries about theft or damage. In recent years, digital investment platforms have offered investors more efficient alternatives.
Gold ETFs are mutual fund schemes that invest primarily in gold bullion. These funds track domestic gold prices and are traded on stock exchanges just like equities. When you buy units of a Gold ETF, you are essentially investing in a fund that holds gold on behalf of investors. The value of the ETF rises or falls in line with gold prices. Asset management companies manage gold ETFs and come with fund management expenses. Gold ETFs continue to enjoy a clear edge among retail and institutional investors alike, largely because of their familiarity and ease of trading. Gold mutual funds typically invest in gold ETFs and other gold-linked instruments, offering indirect exposure to gold through professionally managed investment vehicles.
An Electronic Gold Receipt, or EGR, is a newly introduced digital gold instrument regulated by the Securities and Exchange Board of India. The product allows investors to own exchange-traded units backed directly by physical gold held in accredited vaulting facilities. EGRs are digital receipts backed by standardised gold of high purity, generally 999 fineness, stored with licensed vault managers within a regulated ecosystem involving exchanges, clearing corporations and depositories. The instruments are maintained in demat accounts, can be bought and sold through stock exchanges, and may also be converted into physical bullion or coins through the prescribed redemption process. EGRs are available in denominations of 0.1 gram (100 mg), 1 gram, 10 grams, 100 grams and 1 kg, providing investors with flexible investment options. Much like shares and other securities, ownership of gold through EGRs is reflected directly in an investor's demat account, with the physical gold backing these receipts being certified, standardised and stored within the regulated ecosystem.
Liquidity Remains The Key Hurdle For Electronic Gold Receipts Gold ETFs continue to enjoy a clear edge among retail and institutional investors alike, largely because of their familiarity and ease of trading. Although EGRs are being viewed as a potentially stronger option for select long-term participants, market specialists argue that the segment still requires deeper liquidity and higher participation before it can rival ETFs in scale. Gold ETFs continue to dominate in terms of liquidity due to their mature investor base, active institutional involvement and long-standing presence in the market. EGRs are still in the early stages of adoption and require greater participation across the ecosystem to build similar trading depth. The rollout of EGRs still faces operational bottlenecks, particularly on the brokerage side, with several trading platforms not yet offering seamless access to EGR trading. EGRs still have lower trading volumes and wider bid-ask spreads—difference between the price buyers are willing to pay and the price sellers are asking—which can make them trade at a slight premium compared to spot gold.
EGRs May Offer Long-Term Savings For Large Investors EGRs could prove more cost-effective than Gold ETFs for investors with a long-term horizon. ETFs usually levy annual fees in the range of 50 to 100 basis points, but EGR-related vaulting expenses remain considerably lower. Experts note that the cumulative savings over five to ten years may become significant, especially for large portfolios and institutional-style investors. Electronic Gold Receipts could offer superior pricing efficiency over time as they are directly linked to physical bullion holdings. However, EGRs will need far stronger market liquidity before these theoretical advantages can translate into practical investor benefits. Gold ETFs, by comparison, may sometimes experience slight tracking discrepancies because of fund-related expenses and structural costs.
Step-By-Step Process: How To Buy Gold ETFs Open a demat and trading account with a SEBI-authorised broker. Complete the e-KYC process using PAN, Aadhaar and bank account details. Add funds to your trading account through your linked bank account. Log in to the trading platform and search for Gold ETFs in the ETF or equity section. Select the number of units or investment amount, place a market or limit order, and complete the purchase during trading hours. The ETF units are then credited to your demat account. Investors can track holdings through the platform and sell units anytime during market hours. Some brokers also offer SIP options for regular investments. Investors can buy and sell EGRs through their trading accounts on the stock exchange in the same way they trade equities, with the underlying gold remaining stored in authorised vaults while ownership is transferred electronically once trades are executed. In certain cases, investors may also have the option to convert EGR holdings into physical gold, subject to exchange regulations and applicable charges.
Taxation Gold ETFs sold within 12 months of purchase are taxed as short-term capital gains, with the applicable rate linked to the investor's income tax bracket. If the investment is held for more than a year, the gains are categorised as long-term and taxed at 12.5% without indexation benefits. EGRs follow a similar taxation framework when traded or sold in the market. However, a 3% GST charge is imposed when investors choose to redeem EGRs for physical gold, a factor that could make physical conversion less attractive. EGRs are seen as potentially better aligned with long-term investment strategies, although stronger liquidity will be essential before they gain wider acceptance.
