India to cut long-term bond issuance as demand from insurers wanes

Bhaskar Dutta and Siddhartha Singh

  India will scale back the issuance of longer-maturity bonds over the next six months, as demand from insurance and pension funds shows signs of easing. 

The administration retained the bond-sale target at 6.77 trillion rupees ($76.3 billion) for the second half of the fiscal year ending March 2026, the government said in a statement after market hours on Friday. Of that, 29.5% will be in the 30- to 50-year maturity bucket, down from 35% in the first half. 

The move may spur a rally in longer-tenor bonds, following calls from market participants for the government to reduce issuance of these securities. The appeal followed the worst selloff in three years in August, driven by concerns the government may raise borrowing to offset revenue losses from recent consumption tax cuts. 

Demand from insurers — traditionally among the biggest buyers of sovereign debt — is fading as premium growth slows and post-Covid buying momentum wanes. Some of India’s largest pension funds are also cutting back purchases after rule changes allowed them to boost equity exposure. 

Insurance companies held 25.95% of sovereign debt as of June 2025, down from 26.1% in December, according to the central bank’s latest data. Pension fund holdings also dipped to 4.96% from 5.05%.