Bloomberg won't include Indian bonds in Global Aggregate Index for now

Index provider says it needs to assess operational and market infrastructure issues, with an update due mid-2026

Indian government bonds will not be included in the Bloomberg Global Aggregate Index for now, Bloomberg Index Services Ltd (BISL) said on Tuesday, citing the need for further assessment of operational and market infrastructure issues. It said an update on the review will be provided in mid-2026.

 

India was being evaluated for a potential weight of around 1 per cent in the index, an allocation that could have translated into $25 billion of inflows, spread over roughly 10 months.

 

BSIL said feedback from investors indicated broad support for the long-term trajectory of the Indian government bond market and for its potential eventual inclusion in the global investment grade benchmark. At the same time, a number of respondents highlighted important operational and market-infrastructure considerations that merit further evaluation before inclusion 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,” BSIL said.

 

“In light of this feedback, BISL intends to keep the review of Indian government bonds for the Bloomberg Global Aggregate Index open and ongoing, while continuing to engage with index users, market participants, custodians, regulators, and relevant authorities to better understand further efficiencies that could be made in market infrastructure and post-trade processes,” the index provider said in a note.

 

BSIL further said that while these features are more common for emerging-market (EM) investors and were considered acceptable for BISL’s emerging-market indices, respondents noted that the Global Aggregate Index caters to a much broader and more operationally diverse investor base.

 

The decision comes at a time when domestic bond yields remain elevated due to supply pressures, while the rupee continues to face pressure amid sustained foreign outflows and delay in the trade deal with the US, which has imposed a steep 50 per cent tariff on India. The yield on the 10-year government bond hardened 34 basis points (bps) since the 50 bps rate cut on June 6 last year. Yields stayed elevated despite the Reserve Bank of India (RBI) reducing the policy repo rate by 125 bps in 2025.

 

India was included in the JPMorgan Emerging Market Local Currency Index in June 2024, the Bloomberg Emerging Market Local Currency Bond Index in January 2025, and the FTSE Russell Emerging Market Index in September 2025.

 

Experts said that the decision is expected to disappoint a section of the market. However, movements in the broader rates market are likely to be driven by the supply-demand dynamics, which remain unfavourable. Another key factor will be the extent of open market operations (OMOs) by the RBI, with limited foreign inflows likely to prompt an increase in OMOs. The impact on bond yields going forward will depend critically on the scale of OMOs conducted in FY27.

 

“There were some expectations that India might get included and, of course, it will be disappointing for the section of the market which expected an inclusion. Having said that, the broader rates market move will be determined by the supply-demand story, which, in our view, remains unfavourable,” said Anubhuti Sahay, head of India economics research, Standard Chartered Bank.

 

The yield on the benchmark 10-year government bond settled 2 bps higher at 6.63 per cent on Tuesday.

 

“The inclusion would have helped because those capital flows were also required and there are challenges in demand-supply. It would have helped in these areas,” said the treasury head of a private bank.

 

When JPMorgan had announced in September 2023 that Indian bonds would be phased into the index starting June 28, 2024, reaching the full 10 per cent weighting by March 31, 2025, at 1 per cent per month, analysts predicted passive inflows of $20 billion-$25 billion, with bullish scenarios extending up to $30 billion when including active repositioning. Much of the inflows occurred in the months leading up to the actual inclusion between September 2023 and June 2024 — net inflows stood at approximately ₹92,302 crore. This indicated significant frontloading by investors who anticipated the move and adjusted their portfolios ahead of schedule.

 

Between June 2024 and March 2025, total foreign purchases under the fully accessible route (FAR) had reached ₹1.09 trillion, which is approximately $14 billion.