More Stories

Informist, Friday, Jun. 5, 2026

 

--Dealers:Bets of Bloomberg bond index inclusion Jun rise on govt, RBI steps 

--CONTEXT:Bloomberg to mull India bonds' Global Aggregate index add mid-2026

 

MUMBAI – Expectations of the inclusion of Indian government bonds eligible under the Fully Accessible Route in Bloomberg Index Services Ltd.'s flagship Global Aggregate Index this month have risen after the Reserve Bank of India and the Centre Friday unveiled a slew of measures to improve foreign inflows, dealers said. Upon deferring the inclusion in January, Bloomberg had said it plans to provide the next update on the potential inclusion by mid-2026. Most traders expect the review this month.

 

The Centre Friday removed the 20% withholding tax on interest earned by foreign institutional investors on their investment in Indian gilts and exempted them from paying capital gains tax on these securities. In his policy statement Friday, RBI Governor Sanjay Malhotra announced other measures to boost India's balance of payments, including removing limits on foreign portfolio investors' purchase of gilts under the general route. The central bank will also add all new issuances of 15-, 30-, and 40-year gilts to the Fully Accessible Route, Malhotra said. The governor also announced short-term measures to shore up capital, such as a facility to boost external commercial borrowings by state-owned banks and concession on banks' hedging cost to raise fresh foreign-currency non-resident deposits.

 

"Market-opening measures" such the Fully Accessible Route have aided the inclusion of Indian gilts in global bond indices previously, which has helped capital flows and improved the credibility of India's bond market, the Centre said in a release Friday. Market participants estimate a potential passive inflow of $20 billion to $25 billion if Indian debt is included in Bloomberg's flagship index.

 

"Whatever RBI and the government have done today (Friday), it's all positive," a fund manager at an insurance company said. "It's all in Bloomberg's hands now and what feedback FPIs give. I feel that they should include India because government has done whatever it can and even concentration limits have been done away with. Since witholding tax has gone, there is even talk of finally going ahead on Euroclear." For several years, there have been hurdles in allowing settlement of trades in Indian bonds by global clearing platform Euroclear. The tax incentives Friday could clear these obstacles, the fund manager said. 

 

The recent surge in crude oil prices, geopolitical turmoil, and low risk appetite are seen as factors that could prevent an inclusion of Indian gilts in the Bloomberg flagship index currently, dealers said. However, the structural change in India's regulations Friday could override those factors, they added. In January, the index services provider had said the lack of fully-automated trading workflows, complex and long procedures for fund registrations, and settlement and repatriation timelines of post-trade tax proceedings in India were some issues raised by foreign investors.

 

Traders were optimistic about India's inclusion in the Bloomberg index in June even before the latest steps by the regulator and the government. Bloomberg's decision to delay the inclusion of Indian bonds was seen to stem partly from the frosty political relations between the US and India in January, with India's exports to the world's largest economy attracting 50% tariff and negotiations on a trade deal getting prolonged. The tariffs have since been sharply lowered and talks to close a bilateral trade agreement continue. Foreign investors have also had increased access to India's bond market through the linkage of the Clearing Corp. of India Ltd. to global bond platforms such as MarketAxess and TradeWeb over the last few months.  End

 

Reported by Cassandra Carvalho and Aaryan Khanna

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.