HDFC Mutual Fund has reportedly decided to withdraw the proposed launch of its Gold-Silver Passive Fund of Fund (FoF), which was scheduled to open on May 15, 2026. The move comes amid growing concerns over rising imports of precious metals and recent policy measures aimed at reducing pressure on India’s foreign exchange reserves.
The development follows the government’s decision to sharply increase import duties on gold, silver, and other precious metals, along with broader efforts to discourage excessive imports during a period of global economic uncertainty and elevated commodity prices.
Proposed NFO Withdrawn Before Launch
According to reports, the proposed Gold-Silver Passive FoF was designed to invest in exchange traded funds (ETFs) linked to gold and silver prices. However, the fund house has now chosen to withdraw the new fund offer before its launch date.
The decision comes shortly after the government increased import duties on precious metals from 6% to 15%, including a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC).
The revised duty structure is intended to curb rising imports of precious metals, which have contributed significantly to India’s import bill and trade deficit.
Precious Metal Imports Under Government Focus
India remains one of the world’s largest consumers and importers of gold and silver. Rising global prices and increasing investor participation in precious metal-backed financial products have led to substantial growth in imports over the past year.
According to industry data, silver ETF assets reportedly increased from around ₹15,477 crore in April 2025 to nearly ₹81,944 crore by April 2026. Similarly, gold ETF assets rose from approximately ₹61,422 crore to ₹1.78 lakh crore during the same period.
The sharp increase in investment flows into precious metal-linked instruments coincided with strong price rallies in both gold and silver.
Rising Prices Fuel Investor Interest
Over the past year, gold prices have reportedly delivered gains of around 61% in rupee terms, while silver prices surged nearly 172%. The rally in precious metals occurred during a period when broader equity benchmarks, including the Nifty 50, witnessed comparatively weaker performance.
The strong returns attracted significant investor interest toward gold and silver ETFs, passive commodity-linked products, and other investment vehicles tied to precious metals.
However, higher imports of bullion and related products have also added pressure on India’s current account balance and foreign exchange reserves, prompting policy intervention.
Government Measures to Reduce Import Pressure
The withdrawal of the proposed fund launch aligns with the broader policy direction aimed at moderating precious metal imports.
Recent government measures include higher customs duties on bullion imports and appeals encouraging moderation in purchases of imported precious metals during a period of global economic volatility and rising energy-related import costs.
The increase in duties is expected to make imports more expensive and potentially reduce demand for imported gold and silver products over time.
Impact on Precious Metal Investment Products
The decision by HDFC Mutual Fund reflects how policy developments and macroeconomic considerations can influence product launches within the asset management industry.
Commodity-based mutual fund schemes and ETF-linked products have witnessed increasing popularity in recent years as investors sought diversification through exposure to precious metals.
However, changes in taxation, import duties, and broader economic policy can significantly affect market conditions for such investment products.
Summary
HDFC Mutual Fund has reportedly withdrawn its proposed Gold-Silver Passive Fund of Fund NFO ahead of launch amid rising concerns over precious metal imports and recent import duty hikes. The move comes after the government increased import duties on gold and silver to 15% as part of broader measures aimed at reducing pressure on foreign exchange reserves and managing India’s trade balance.
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