A gold exchange traded fund is an exchange traded fund (ETF) that invests in gold and gold related instruments as the underlying and aims to track the price of gold. The return of Gold ETF schemes is directly dependent on the returns on the underlying i.e., gold and accordingly, the net asset value of the Gold ETF is calculated and disclosed on very business day. Gold ETFs do not offer any guaranteed or assured returns.

The details of number and value of investments in Gold Exchange Trade Funds as on June 30, 2015 is as under:

No. of Gold Exchanged Traded Funds	Assent under Management (in Rs. crores)
13	6,51,636

The regulatory provisions prior to February 15, 2013 mandated Gold ETFs to invest predominantly in physical gold. However, Securities and Exchange Board of India (SEBI) vide circular dated February 15, 2013 has allowed Gold ETFs of Mutual Funds to invest in Gold Deposit Schemes (GDS) of Banks upto 20% of the net assets of the scheme.

The Government took series of measures to contain gold imports in order to contain Current Account Deficit (CAD) which inter-alia included:

• Gradual increase in customs duty from 2 per cent in January 2012 to 10 per cent in August 2013.
• The Reserve Bank of India put in place the 20:80 scheme for nominated banks/agencies/entities to rationalize the import of gold in any form/purity including import of gold coins/dore into the country. This together with other measures to contain imports led to significantly lower levels of trade and current account deficits in 2013-14. The continuance of this moderating trend in 2014-15 led to the withdrawal of the scheme in November 2014.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Rajya Sabha today.

Gold ETF regulation permits limited investment in bank gold deposit schemes, maintains daily NAV disclosure and no guaranteed returns. Gold ETFs invest in gold and gold related instruments with returns tied to the underlying, publish daily net asset value, and do not guarantee returns. A regulatory change allowed limited investment of Gold ETF schemes in bank Gold Deposit Schemes instead of exclusively holding physical gold. Fiscal and external sector measures, including higher customs duties and an import rationalisation mechanism for nominated importers, were employed to contain gold imports and address current account pressures.