Initially, ETFs struggled to gain attraction among Indian investors, primarily due to a lack of awareness and understanding. Mutual funds were still the preferred investment vehicle for most people.
However, with time, the Indian market matured, and ETFs began to grow in popularity as a low-cost, diversified investment tool.
The journey of Exchange Traded Funds (ETFs) in India started in 2001 with the launch of Nifty BeES (Benchmark Exchange Traded Scheme) by Benchmark Mutual Fund, which was the first equity ETF in the country.
The turning point came in 2014, when the Government of India introduced the Employees’ Provident Fund Organisation (EPFO) mandate to invest a portion of its funds in equities through ETFs.
This move boosted the ETF market significantly, leading to a surge in Assets Under Management (AUM). The launch of the Bharat Bond ETF in 2019, India’s first corporate bond ETF, further broadened the scope of ETFs beyond equities to fixed-income investments.
Another key milestone was the increasing focus on passive investing strategies. With Indian investors becoming more cost-conscious and seeking efficient ways to diversify their portfolios, ETFs began to emerge as a popular option.
The Indian ETF market has witnessed consistent growth, with total AUM in ETFs crossing the ₹ 6.95 lakh crore mark in 2024.