HDFC Mutual Fund Withdraws Gold-Silver FoF NFO Amid Import Duty Hike Concerns

HDFC Mutual Fund has reportedly decided to withdraw the proposed new fund offer (NFO) of its HDFC Gold Silver Passive Fund of Fund, amid growing concerns over the recent hike in precious metal imports and their impact on India’s external sector.

The NFO, which was scheduled to open on May 15 and close on May 29, has been officially withdrawn through an addendum issued by the fund house on May 13.

“NOTICE is hereby given that the launch of NFO of HDFC Gold Silver Passive FOF scheduled from May 15, 2026 to May 29, 2026 stands withdrawn,” the addendum stated.

The proposed scheme was designed to invest in exchange-traded funds (ETFs) linked to gold and silver.

Confirming the decision, Navneet Munot, MD and CEO of HDFC AMC, said the decision was taken in view of the broader policy and macroeconomic environment surrounding precious metal imports.

“We have decided to defer the NFO of our Gold-Silver Passive FoF in light of the broader national conversation around precious metal imports and their impact on the external account. We encourage investors to consider equity and debt mutual funds that channel household savings into productive capacity formation in the Indian economy,” Munot said.

The withdrawal comes at a time when the government is stepping up efforts to curb non-essential imports as India faces pressure from elevated crude oil prices, a weakening rupee, and rising external sector risks linked to the ongoing West Asia crisis.

Earlier this week, the government increased the effective import duty on gold and silver to 15 per cent from 6 per cent. The revised structure includes a 10 per cent basic customs duty and a 5 per cent Agriculture Infrastructure and Development Cess (AIDC), effective May 13.

The move marks a partial reversal of the customs duty cuts announced in the Union Budget 2024-25, when import duties on precious metals were reduced to support the gems and jewellery sector, moderate domestic prices, and discourage smuggling.

Prime Minister Narendra Modi had also urged citizens to postpone gold buying, reduce fuel consumption, and avoid unnecessary foreign travel in an effort to conserve foreign exchange reserves amid rising global uncertainty and higher energy prices.

India’s dependence on imported crude oil and precious metals has become a growing concern for policymakers. The country imports most of the gold it consumes, while crude oil imports account for a major share of the import bill.

According to government data, India’s gold imports rose more than 24 per cent to a record $71.98 billion in FY26, largely driven by higher international gold prices despite lower import volumes. The rupee also touched a record low of 95.89 against the US dollar this week, increasing concerns around the current account deficit and balance of payments.

Despite policy tightening, investor interest in precious metals has remained strong due to robust returns over the past year. In rupee terms, gold has delivered returns of around 75 per cent over the past year, while silver has surged 172 per cent. In comparison, the Nifty 50 has declined nearly 4 per cent during the same period.

Investor flows into precious metal ETFs have also seen a significant rise. Assets under management (AUM) of silver ETFs climbed from Rs 15,477 crore in April 2025 to Rs 81,944 crore in April 2026, while gold ETF AUM increased from Rs 61,422 crore to Rs 1.78 lakh crore during the same period.

Frequently Asked Questions

1. Why did HDFC Mutual Fund withdraw the Gold-Silver Passive FoF NFO?

HDFC Mutual Fund withdrew the NFO amid rising concerns over precious metal imports, higher import duties on gold and silver, and their impact on India’s external account and foreign exchange reserves.

2. What is the current import duty on gold and silver in India?

The government has increased the effective import duty on gold and silver to 15 per cent from 6 per cent, including a 10 per cent basic customs duty and 5 per cent AIDC.

3. Should investors still invest in gold and silver ETFs after the duty hike?

Despite the higher import duty, investor interest in gold and silver ETFs remains strong due to robust returns and their appeal as safe-haven assets during global uncertainty.