Bloomberg delays India’s entry to global bond index yet again

Mumbai: The highly anticipated inclusion of Indian government bonds in Bloomberg’s Global Aggregate Index has been deferred once again, with the company saying operational and market infrastructure aspects required further evaluation. The deferral could cause sovereign bond yields to immediately harden.

India’s financial markets had factored in the likelihood a mid-July review would facilitate the inclusion of Indian sovereign bonds on the Global Aggregate index, which is tracked by a broad swathe of asset managers from Tokyo to Toronto for allocation of patient, long-duration funds. It is one of the world’s most widely followed investment-grade bond benchmarks, tracking more than $70 trillion worth of bonds.

Bloomberg Index Services (BISL) said Friday that Indian operational and market-infrastructure required further evaluation before the inclusion of the debt instruments in a flagship global investment grade index.


“These considerations include, among others, the current lack of fully automated trading workflows, settlement and repatriation timelines associated with post-trade tax processes, and the complexity and duration of fund registration procedures,” BISL said.

Expectations were high following coordinated government and monetary-authority measures the markets believed would build a strong business case for inclusion of Indian bonds on the gauge.

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Market was Running on Expectation

Estimates of inflows varied, but even the most conservative among analysts had penciled in $10-15 billion of inflows during the phase-in window itself.

“The market was running on expectations that Indian government bonds will be included in the Bloomberg index,” said Vijay Sharma, senior executive vice-president, PNB Gilts. “Since this has not happened, the markets could witness a sell off by 8-10 basis points.”

One basis point is a hundredth of a percentage point.

Targeted Measures

For its part, the Indian government had waived taxes on capital gains and interest on investment returns. The Reserve Bank of India (RBI), meanwhile, had also expanded the eligible investable universe for overseas funds to include long-duration bonds that stretched maturities running up to 30 years.

Tax exemptions on interest income and capital gains have been a key factor in Bloomberg’s consideration of including Indian bonds in its index and the inclusion of Indian debt in the gauge have driven the recent rally in the bond market.

The 10-year bond yield had softened 26 basis points in June, when overseas funds poured record money into Indian government bonds.

Foreign portfolio investors (FPI) poured in a record Rs 55,518 crores in June into these instruments, with the inflows generally driven by expectations that an announcement on the country’s inclusion in the Bloomberg bond index is imminent.

Yields on the 10-year benchmark government bond closed at 6.83% on Friday, up two basis points from its previous close. Bond dealers expect yields to trade around 6.90% on Monday.

Goldman Sachs had said in a recent report that it expected $15 billion passive inflows in the phase-in period after the highly anticipated inclusion announcement.

Indian bonds are already part of three major emerging-market debt indexes - the JP Morgan EM index included in June 2024, Bloomberg EM index included in January 2025 and the FTSE Russel EM index included in September 2025.

After the inclusion, FPIs invested over Rs 22,000 crores in a single month, the highest at the time, CCIL data showed.