India is still early in passive investing compared with US: Ashutosh Singh

As the Sensex turns 40, passive investing is reshaping India's markets, with indices emerging as the backbone of ETFs and low-cost investment products

The Sensex’s 40-year milestone comes at a time when passive investing is reshaping India’s capital markets, with indices increasingly forming the backbone of investment products. Passive investing is expanding in India but it is still at an early stage, says Ashutosh Singh, managing director and chief executive officer of BSE Index Services. Singh, in an email interview with Business Standard, reflects on the Sensex’s four-decade journey. 

What are your thoughts on Sensex completing 40 years? 

The Sensex turning 40 is more than a milestone; it reflects India’s transformation. Launched in 1986, it began in an era of paper slips and chalkboards, when India’s economy was smaller and closed. Over four decades, the Sensex has grown alongside a nation in transition, witnessing liberalisation, reforms, and global expansion. From scarcity to scale, from an emerging market to one of the fastest-growing large economies, it has mirrored India’s rise as a global superpower. Today, the Sensex at 85,000 represents more than corporate performance; it embodies the ambition of 1.5 billion people and the confidence of a mature capital market.

 

Passive investing has gained traction. What structural factors have driven this rise? 

The past decade has been pivotal for passive investing in India. The momentum started with institutional conviction — government-backed initiatives like EPFO allocations and ETF-led disinvestment programmes — created early scale and credibility. Regulatory reforms, including mutual fund categorisation and the adoption of total return indices, added clarity and discipline. Lower costs, transparent rules-based strategies, and fintech-driven access broadened participation, while innovation in factors and themes mirrored global best practices. Passive assets have grown at over 50 per cent compounded annual growth rate and account for nearly 17 per cent of mutual fund assets under management. Yet, compared to markets like the US, India is still early in its journey.

 

What are the new trends in passive investing? 

Passive investing has evolved beyond market-cap indices, embracing factor strategies like momentum, quality, value, and low volatility, along with thematic, sectoral and ESG approaches. These trends offer investors transparency and cost-efficient ways to align portfolios with long-term structural themes. Improved data quality and disclosures are accelerating the adoption of sustainability-linked strategies.

 

How many indices does BSE Index manage, and what themes shape the creation of specialised indices? 

BSE Indices manages over 185 indices, spanning domestic benchmarks, currency variants and customised solutions. Index creation follows two clear paths. One is insight-led: Identifying gaps in the market and introducing benchmarks that reflect evolving investment needs. The other is consultative: Working closely with asset managers to translate ideas into robust, investible and relevant indices.

 

What are the assets under management of the Sensex family of indices? 

Assets tracking BSE Indices are close to ₹2.75 trillion with more than 75 equity passive schemes benchmarked to our indices. Over half of India’s portfolio management services strategies use BSE benchmarks Recent launches across the extended Sensex family have seen strong interest. Our role is to act as an enabler; market share follows relevance and trust.

 

BSE ended its joint venture with S&P Dow Jones Indices last year. How have things evolved since the transition? 

BSE acquired full ownership of its index business, enabling rapid benchmark development aligned with emerging trends. Since integration, BSE has accelerated index creation, leveraging market expertise and past learning. The response has been strong, adding 150 domestic and 20 international clients post-acquisition.

 

Does BSE plan to take the Sensex brand global? 

We remain in continuous dialogue with global fund managers, asset owners and market participants seeking India exposure. Whether through broad-market benchmarks or more specialised strategies, our indices are increasingly being evaluated as transparent and credible gateways to India’s growth story.