New Delhi, July 16 -- The Securities and Exchange Board of India (Sebi) has unveiled a consultation paper that proposes to bring sweeping changes to how physical gold and silver held by Exchange Traded Funds (ETFs) are valued. The proposal, open for public comment until 6 August, seeks to replace the current valuation system, which relies on international prices, with a simpler approach grounded in domestic market realities.

Currently, mutual fund houses managing gold and silver ETFs use the London Bullion Market Association (LBMA) price in US dollars as the benchmark. This price is then converted to Indian rupees and subjected to a host of adjustments-customs duties, local taxes, and variable premiums or discounts-to reflect Indian mark...