NSE EGR trading starts today. Should gold investors buy metal in its newest form?

18 May 2026, 02:32 by Veer Sharma · The Economic Times

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The National Stock Exchange has launched Electronic Gold Receipts. Investors can now own gold in an electronic format.

The NSE will begin trading in Electronic Gold Receipts (EGRs) from today, May 18, marking a major shift in the evolution of gold investing in India. The market shall operate from Monday to Friday between 9:00 am and 11:30 pm, or until 11:55 pm during the U.S. daylight saving time period. The settlement cycle follows a T+1 format. Key participants in the market include retail investors, jewellers, bullion traders, refineries and other stakeholders.

The launch of EGRs by the National Stock Exchange represents one of the most significant structural changes in India’s organised gold market in recent years. The product allows investors to own gold in electronic form, while being backed by actual physical gold stored in SEBI-regulated vaults. Ownership is reflected directly in an investor’s demat account, much like shares and other exchange-traded securities.

For generations, gold has occupied a unique position in Indian households. It has never been viewed merely as an investment asset. Gold represents wealth, security and tradition, often passed down through families across decades. Yet despite its cultural and financial importance, owning physical gold has always come with limitations. Investors have traditionally had to worry about purity, storage, theft risks and deductions during resale.

EGRs attempt to solve many of those inefficiencies while preserving exposure to the underlying metal.

What is a gold EGR?

An Electronic Gold Receipt is a digital representation of ownership of physical gold. Each EGR corresponds to a fixed quantity of gold stored in a regulated vault under a framework supervised by the Securities and Exchange Board of India.

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Like shares or other securities, the ownership of gold is reflected directly in an investor’s demat account. The gold backing these receipts is certified, standardised and held by licensed vault managers within a regulated ecosystem involving exchanges, clearing corporations and depositories.

One of the biggest advantages of EGRs is flexibility in investment size. Investors are not required to buy large quantities of gold to participate. The receipts are available in multiple denominations including 1 kilogram, 100 grams, 10 grams, 1 gram and even 100 milligrams, widening access across different categories of investors.

How are EGRs different from other forms of gold investing?

Physical gold refers to gold purchased in the form of jewellery, coins or bars. It remains the most traditional way of owning gold and involves direct physical possession of the metal.

Gold ETFs are gold-backed securities traded on stock exchanges. They allow investors to gain exposure to gold prices without physically holding the metal.

Gold mutual funds primarily invest in gold ETFs and related gold-linked instruments, offering indirect exposure to gold through professionally managed funds.

Sovereign Gold Bonds are government securities denominated in gold and backed by physical gold. They provide investors exposure to gold without the need for storage or physical handling.

What are the drawbacks?

While EGRs could eventually bridge India’s emotional trust in physical gold with the efficiency of modern financial markets, experts say several hurdles still remain before the product can achieve scale.

Liquidity is perhaps the biggest challenge. Without active market makers and stronger institutional participation, retail investors may hesitate to enter a market where exit liquidity is still uncertain.

Broker enablement remains another issue. Many trading platforms do not yet fully support EGR trading, limiting accessibility despite rising curiosity around the product.

There is also a deeper behavioural challenge. Indian investors have historically associated gold ownership with physical possession. Convincing households to replace that emotional connection with electronic receipts may take time, no matter how efficient the structure becomes.

Taxation adds another layer of friction. While EGR screen trades do not attract GST, conversion into physical gold carries a 3% GST levy, reducing flexibility for investors who may eventually want physical delivery.

Why EGRs matter?

The broader objective behind the EGR framework is to create a transparent and regulated gold trading ecosystem in India while gradually positioning the country as a global price setter for gold. The system has been designed to bring retail investors, jewellers, bullion traders and refineries onto a single platform. Over time, this could help create more uniform and market-driven pricing instead of the fragmented city-based rates that currently dominate the physical gold trade.

NSE Chief Business Development Officer Sriram Krishnan said the launch of EGRs marks an important evolution in the way India engages with gold. According to the exchange, NSE’s technology and liquidity framework could make gold investing more transparent, secure and accessible for investors across the country. The exchange also said the move could help integrate gold more closely into India’s capital markets ecosystem, while encouraging greater financial inclusion and reducing dependence on fragmented pricing benchmarks.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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