The Indian Etf Market: From Inception to Innovation

Abstract

Exchange-Traded Funds (ETFs) have emerged as a vital component of global financial markets, offering investors diversification, liquidity, and cost efficiency. In India, while ETFs have grown steadily since their introduction in 2002, they remain a smaller segment of the mutual fund industry compared to global standards. This study explores the growth, challenges, and opportunities in India’s ETF market, focusing on regulatory milestones, market trends, and comparisons with international markets. It highlights key barriers, including limited retail awareness, low product diversity, and liquidity issues, alongside opportunities from rising digital adoption, investor interest, and regulatory reforms. By analyzing data from industry reports and academic studies, the paper provides actionable insights for policymakers, asset managers, and investors. The findings emphasize the need for innovation, enhanced investor education, and supportive regulation to unlock the full potential of ETFs in India and drive their future growth.