Not as safe as directly investing in G-secs
Depends
The underlying security is the same, be it G-sec or Gilt, i.e., both are govt bonds with a sovereign guarantee.
The problem arises primarily because of the different maturity periods.
When you invest in a G-sec, and hold it till maturity, you capital is safe, as you will get back the face value (i.e., not selling when the interest rates rise/bond price falls)
When you invest in a Gilt fund, you are not investing in a single G-sec with fixed maturity, you are investing in multiple G-secs with varying maturity and coupon rates.
So, there is no concept of holding till maturity here, and it all depends on the timing of your redemption of such Gilt fund units.
If you redeem when the interest rates are falling, you will get back your Capital+ some gains due to the premium, but, if you redeem at the time when the interest rates are rising, you might not get back the same capital, as the fund might sell at a discount.
As pointed out by _VishalJain, the “price risk is there depends on the underlying duration the portfolio”
Capital safety, appreciation or depreciation, is purely based on the timing of redemption, if the redemption is made during a less volatile period, the capital is safe, in other cases, there could be capital gains/loss based on the repo rates set by the RBI at that time.
This is how understand it.