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

As per news report, HDFC Mutual Fund has decided to withdraw its proposed Gold-Silver Passive Fund of Fund (FoF) NFO that was supposed to be launched on May 15, 2026.  

The decision aligns with Prime Minister Narendra Modi's recent appeal urging citizens to minimise gold and silver purchases to conserve foreign exchange reserves amid economic instability. 

Reasoning Behind HDFC Mutual Fund's Withdrawal 

The withdrawal comes as concerns rise over the growing import of precious metals, which negatively impacts India's trade balance.  

This NFO aimed at investing in ETFs linked to gold and silver would have further contributed to these challenges. A significant duty hike on these metals from 6% to 15% was also a governmental measure to curb demand. 

Impact of Precious Metal Imports on Trade Balance 

With import duties now set higher, the government hopes to dissuade large-scale purchases, thereby stabilising the country's foreign exchange situation.  

India's import dependency had led to a substantial increase in precious metal holdings, with silver ETFs alone growing from ₹15,477 crore in April 2025 to ₹81,944 crore in April 2026, and gold ETF assets increasing from ₹61,422 crore to ₹1.78 lakh crore within the same timeframe. 

Government Intervention and Market Response 

Prime Minister Modi's call to refrain from purchasing gold and silver is part of broader economic measures. The significant increase in import duties reflects the government's commitment to reinforcing foreign exchange reserves during uncertainty.  

These policy changes have also sparked notable reactions in the market, with recent trends showing unprecedented returns for these metals. 

Read More: NFO Alert: DSP Mutual Fund Launches DSP Nifty FMCG ETF! 

Recent Trends in the Precious Metals Market 

In the last year, gold has appreciated by 61% and silver by 172% in rupee terms, despite a decline in benchmark indices like the Nifty 50 by 5.19%.  

These dynamics have naturally heightened interest and investment flows into precious metal-backed financial instruments. 

Conclusion 

The decision by HDFC Mutual Fund to withdraw the Gold-Silver FoF NFO underscores the alignment of financial strategies with national priorities in maintaining macroeconomic stability. The measures reflect a concerted effort to balance market interests with broader economic goals, particularly during tumultuous times. 

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