India's third biggest gold fund will begin accepting fresh investments again after shutting off new buy-ins three months ago to support government efforts to curb bullion demand and control a rising trade deficit.

Reliance Gold Savings Fund, which manages about $300 million according to Lipper data, will begin accepting subscriptions from Wednesday after suspending inflows on August 1, according to a notice sent to investors.

The government and the Reserve Bank of India (RBI) launched a series of measures this year to curb the country's appetite for gold as India battled a ballooning trade deficit and a weak currency. Gold is the biggest item on India's import bill after oil.

The gold fund is part of Reliance Capital, controlled by billionaire Anil Ambani. It is India's third biggest gold fund after exchange traded funds run by Goldman Sachs and Reliance.

Reliance cited the current macroeconomic environment for the move to reopen the mutual fund to investors, but did not elaborate.

India's trade deficit narrowed last month following lower gold purchases and an increase in exports, supporting the rupee.

Gnanasekar Thiagarajan, a director with Commtrendz Research, said the drop in gold imports and the current account deficit could have prompted Reliance to reopen the fund for business.

However, the biggest challenge will be to find gold supplies as it is not available in the market, he said.

The government's measures to slow imports have caused premiums in India to jump to $120 per troy ounce over London prices as supplies have been unable to meet demand.

Earlier this year, Reliance said it would close the fund to fresh investment and suspend sales of physical gold to support the policy objectives of the government and the Reserve Bank of India. It was the only fund to do so.

India has imposed a 10 per cent duty on imports of gold, and tied imports to exports.

Imports have fallen to a mere 7 tonnes in September from a record 162 tonnes in May.

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