Electronic Gold Receipts Clock Rs 96 Crore Turnover On NSE Since Launch – Can They Challenge Gold ETFs?

Electronic gold receipts (EGRs) recorded turnover of Rs 95.79 crore on the National Stock Exchange (NSE) between their launch in May 2026 and October 23. During this period, 6,079 units changed hands across 2,729 trades, according to exchange data.

Earlier this month several mutual fund houses temporarily stopped accepting fresh investments in select Gold ETF fund-of-funds (FoFs) from October 15 onward. Though existing SIPs are allowed to continue. The restrictions do not affect Gold ETFs themselves, which investors can continue to buy and sell on stock exchanges through brokers. The pause in FoF investments may draw attention to alternatives such as EGRs.

EGRs offer investors another way to invest in gold, alongside Gold exchange traded funds (ETFs). Each EGR represents ownership of physical gold stored in accredited vaults. Gold ETFs, on the other hand, allow investors to gain exposure to gold prices by buying and selling units on stock exchanges.

Trading activity peaked in August, when EGRs worth Rs 45.68 crore changed hands, followed by Rs 34.19 crore in September. From October 1 to 23, turnover stood at Rs 15.44 crore across 381 trades. NSE recorded five trades worth Rs 48.38 lakh in May, while no trades were reported in June and July.

However, turnover alone does not reveal the number of investors, trading liquidity or how easily investors can buy and sell EGRs at competitive prices.

What Are Electronic Gold Receipts

An EGR is a security representing ownership of physical gold stored in a vault approved under the Securities and Exchange Board of India (Sebi) framework. The receipt is held in dematerialised form in a demat account and traded on a recognised stock exchange. Investors can seek conversion into physical gold, subject to the applicable delivery conditions and charges.

The Union Government, in its 2021-22 Budget presented by Finance Minister Nirmala Sitharaman, proposed a regulated gold exchange. Sebi subsequently established the regulatory framework for EGRs. The segment started trading on BSE in October 2022. NSE launched its segment in May 2026.

NSE offers EGRs backed by gold of 995 and 999 purity, equivalent to 99.5 per cent and 99.9 per cent purity. Available denominations range from 10 milligrams to one kilogram. The purchase amount depends on the gold price and the contract being traded.

EGRs Versus Gold ETFs

An EGR represents ownership of physical gold held in an approved vault. A Gold ETF is a mutual fund scheme that invests in gold and issues units to investors. Both provide exchange-traded exposure to gold, but their ownership structures differ.

Investors need a trading and demat account and a broker offering EGR trading. Gold ETFs are also bought and sold through a broker on the stock exchange. Investors can alternatively invest through a Gold ETF fund-of-funds (FoF), which invests in Gold ETF units and may offer systematic investment plans (SIPs).

The minimum investment depends on the product’s trading price. NSE’s smallest EGR denomination is 10 milligrams, while the minimum outlay for a Gold ETF depends on its unit price.

EGR investors can convert their holdings into physical gold, subject to minimum withdrawal quantities and charges for vault withdrawal, assaying and transportation. Gold ETF investors typically sell their units on the stock exchange to receive cash. Physical redemption in case of Gold ETFs is available only under certain schemes and conditions, and is not a standard option for retail investors.

Gold ETFs charge an annual expense ratio to cover fund management costs. EGRs do not carry this fee, but investors taking physical delivery may incur additional charges for withdrawing gold from the vault, testing it and transporting it.

Liquidity is another consideration. If an EGR has few buyers and sellers, the difference between the buying and selling prices, known as the bid-ask spread, can increase trading costs. Gold ETF liquidity varies by scheme, but investors have a more established market through which to trade these units.

Listed EGRs and Gold ETFs attract the same capital gains tax rates. Gains on holdings of up to 12 months are taxed at the investor’s applicable income-tax slab rate, while gains on holdings exceeding 12 months are taxed at 12.5 per cent without indexation. EGRs, however, can be converted into physical gold, and vice versa, without triggering capital gains tax at the time of conversion.

Can EGRs Challenge Gold ETFs

EGRs give investors ownership of physical gold held in accredited vaults, with the option of taking delivery. However, wider adoption will depend on greater investor participation, competitive costs and reliable delivery arrangements.

In its October 2026 Market Pulse report, NSE said it was working to strengthen the infrastructure needed to support EGR trading. The exchange has onboarded three refineries, Parker Precious Metals, Augmont Enterprises and Gujarat Gold Centre, under its NSE Refiners Standards framework. It is also activating gold collection centres in coordination with SEBI-approved vault managers to make it easier to deposit gold, create EGRs and redeem them.

NSE also said it had empanelled Augmont Gold Tech, a subsidiary of Augmont Enterprises, in September 2026 to support EGR creation and extinguishment and encourage participation across the gold value chain.

India’s estimated 30,000 to 35,000 tonnes of privately held gold could provide scope for the market to grow, NSE said. However, the exchange acknowledged that EGRs remain at an early stage, with significant room to expand trading activity, participation and supporting infrastructure.