The race to become the vanguard of India's stock market is on

India's biggest broker is awaiting regulatory approval for an asset management company that will focus only on passive investing.

India’s $442 billion asset management industry is finally having to reckon with the passive investing juggernaut.

After decades of sluggish growth, the number of accounts invested in index-tracking or exchange-traded funds more than doubled to 5.6 million in the year to April. Passive products now account for nearly a quarter of equity assets under management versus about 16% two years ago, data from the Association of Mutual Funds in India show. That compares to more than 50% in the U.S.

The foundations for the boom were laid by a series of regulatory changes preventing active fund managers from gaming the