Market participants back India’s long-term bond market reforms but flag infrastructure and operational gaps
Bloomberg Index Services has deferred the inclusion of Indian government bonds in its flagship Global Aggregate Index, keeping the country under continued review after receiving feedback from market participants.
In a statement issued on Tuesday, Bloomberg Index Services Limited (BISL) said it would keep its assessment of Indian government securities “open and ongoing”, indicating that while progress has been made, key concerns still need to be addressed before India can be admitted into the world’s most tracked investment-grade bond benchmark.
The Global Aggregate Index is one of the most influential bond benchmarks globally, with trillions of dollars in passive and active investments benchmarked against it. Inclusion would potentially unlock sizeable foreign inflows into India’s debt markets.
According to BISL, respondents to its latest consultation expressed broad support for the long-term development of India’s bond market and its eventual inclusion in global indices. Market participants acknowledged significant reforms undertaken in recent years, particularly improvements in market accessibility and the introduction of the Fully Accessible Route (FAR), which allows foreign investors to buy select government bonds without investment caps.
However, investors also flagged persistent concerns around operational processes, settlement mechanisms, and market infrastructure, which they believe require further evaluation before Indian bonds can be added to a flagship global investment-grade index.
India has already secured inclusion in JPMorgan’s Global Bond Index–Emerging Markets and FTSE Russell’s Emerging Markets Government Bond Index, moves that have triggered steady foreign inflows into government securities. A Bloomberg Global Aggregate Index inclusion is seen as the final and most significant step in fully integrating India into the global bond ecosystem.
For now, the deferment signals that while India’s reform momentum is being recognised, global investors are seeking deeper structural readiness before opening the door to the next wave of large-scale debt inflows.
End of Article
Leave a Reply