There is no clear answer to the question but you will have to take a decision based on your unique needs. Here I will give you some decision points on the difference between index funds and index ETFs so you can make an appropriate choice. Here are the pointers.

Inflows into an index fund add to the AUM of the Fund and outflows reduce the AUM of the fund. On the other hand, when you buy an Index ETF it does not add to the AUM of the ETF but the units just change hands like a normal share. Therefore, availability of liquidity is important in an index ETF.

Index fund is available for purchase or sale based on end of day NAV. Index ETFs are available to buy and sell during the trading hours at a price that reflects the Nifty fraction at point of time. This gives greater flexibility to the Index ETF buyer and captures the volatility of markets better.

An important differentiator is the expense ratio or the TER. The TER of an Index ETF is much lower compared to the index fund. Index funds have an expense ratio of around 1.00% while index ETFs would have an average expense ratio of 0.35%. In addition, index ETF also entail brokerage and statutory costs to execute the trade and that must be added but still the cost is lower than an index fund, where liquidity has to be maintained at all points of time.

Index ETFs and Index funds entail 2 risks you must be familiar with. There is tracking error risk which is higher in case of index funds as they need to keep cash balances. On the other hand, Index ETFs run a higher risk of bid-ask spreads widening when markets get volatile. This is your trade off.

You can do automated SIP in index funds but cannot do automated SIPs in the index ETFs. SIP gives the added benefit of rupee-cost averaging which lowers average cost of units. That is because, ETFs are closed ended funds and any purchase or sale is dependent on market liquidity.

To sum up all the above points, there are two important criteria you must consider when making the choice between Index ETFs and Index Funds: cost and liquidity. If liquidity is easily available in the secondary markets without too much of a basis risk, then the lower costs works in favour of Index ETFs.