Nippon India Launches Nifty India Manufacturing ETF; NFO Opens Aug 6, Aims to Track India's Manufacturing Boom

Mumbai, August 5, 2025 – Nippon India Mutual Fund is gearing up to launch its latest offering – the Nifty India Manufacturing ETF, a sector-focused, open-ended exchange-traded fund that aims to capitalize on India’s growing industrial momentum. The New Fund Offer (NFO) opens on August 6, 2025, and will close on August 20, 2025. The fund will be available for continuous sale and repurchase on or before September 3, 2025.

Key Scheme Highlights

This new ETF is designed to replicate the Nifty India Manufacturing TRI Index, which tracks a broad set of companies contributing to India’s manufacturing ecosystem. Each unit will have a face value of ₹10. The scheme will be listed on both BSE and NSE within five working days of allotment, ensuring easy liquidity for investors post-listing.

Investors can apply during the NFO with a minimum investment of ₹1,000 and in multiples of ₹1 thereafter. The fund carries no exit load, making it suitable for both long-term holders and tactical investors. The expense ratio is capped at 1.00% of daily net assets, adhering to SEBI regulations. Each creation unit will comprise 1,00,000 units, with direct transactions available to Authorized Participants and large investors if the order size exceeds ₹25 crore (with exemptions for EPFO and certain government-related funds until August 31, 2025).

The portfolio will maintain 95% to 100% exposure to constituents of the Nifty India Manufacturing Index, with the remaining allocated to money market or liquid instruments for liquidity management.

Strategy and Objective

The ETF’s core objective is to provide long-term capital appreciation by investing in companies aligned with India’s manufacturing surge. This includes sectors benefiting from national initiatives such as ‘Make in India’ and Production-Linked Incentive (PLI) schemes.

The Nifty India Manufacturing Index includes 75 companies drawn from the Nifty 100, Nifty Midcap 150, and Nifty Smallcap 50 indices. The portfolio spans multiple industries such as automobiles, capital goods, pharmaceuticals, metals, oil & gas, chemicals, and industrials, providing diversified exposure within the manufacturing theme.

Prominent constituents as of June 30, 2025, include Reliance Industries, Sun Pharma, Mahindra & Mahindra, Maruti Suzuki, and Bharat Electronics, with individual weights ranging between 3.9% to 5%. The index follows a diversified sector mandate, requiring a minimum 20% allocation each to Automobile & Auto Components and Capital Goods, while capping individual stock weights at 5% to mitigate concentration risk.

According to Jitendra Tolani, Fund Manager at Nippon India Mutual Fund, “This ETF offers investors a low-cost, transparent opportunity to ride India’s industrial growth wave. By passively tracking a well-curated index, it allows exposure to scalable and resilient manufacturing companies.”

Portfolio & Rebalancing

The ETF will aim to closely track the Nifty India Manufacturing TRI Index, with semi-annual rebalancing to reflect changes in index constituents. The fund is expected to maintain a tracking error below 2%, in line with regulatory expectations. This disciplined replication approach enhances transparency while minimizing deviation from benchmark returns.

Liquidity & Transactions

Investors will be able to buy or sell units directly on NSE and BSE, with the minimum trading lot being 1 unit. For large investors and authorized participants, direct transactions with the AMC will be permitted in creation unit sizes of 1,00,000 units, subject to eligibility conditions and minimum order value thresholds.

Special Features & Taxation

The ETF comes with several investor-friendly features:

• No exit load
• Swing pricing and side-pocketing are not applicable
• Securities lending of up to 15% of total assets is allowed to enhance returns

From a tax perspective, this ETF is classified as an equity-oriented fund. Therefore:

• Long-Term Capital Gains (LTCG) are taxed at 12.5% after one year
• Short-Term Capital Gains (STCG) are taxed at 20%
• IDCW (dividends, if declared) are taxed as per the investor’s applicable income tax slab

How to Invest

Investors can apply through various modes:

• ASBA (Application Supported by Blocked Amount) during the NFO
• Switch-ins from existing Nippon India Mutual Fund schemes (excluding other ETFs, Japan Equity, and US Equity schemes)
• Digital platforms including mf.nipponindiaim.com, Nippon India mobile app, MF Utility (MFU), stock exchange portals, and some broking apps

Company Overview

Nippon Life India Asset Management Ltd (NAM India) is one of the country’s leading asset managers, offering a wide array of passive and active funds across equity, debt, and thematic categories. The firm has been a pioneer in launching innovative ETFs and continues to expand its product shelf to cater to India’s evolving investor base. With multiple ETFs already listed on BSE and NSE, NAM India is committed to providing efficient access to thematic and diversified investment strategies.

REF: https://portal.amfiindia.com/spages/14289.pdf

Disclaimer:  At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations