India's bond index journey: How India secured entry into global benchmarks
New Delhi, Jun 12, 2026
After securing entry into JPMorgan, Bloomberg EM and FTSE Russell indexes, India is now pushing for inclusion in Bloomberg's Global Aggregate Index
Last week, the government promulgated an ordinance to exempt capital gains tax on investments made by foreign institutional investors (FIIs) in government securities (Gsecs). The move is reportedly aimed at the inclusion of Indian sovereign bonds in Bloomberg Index Services' flagship Global Aggregate Index.
Such an inclusion would integrate India's government bond market more deeply with global markets and increase foreign investor participation. Here's a look at India's bond index journey and how it evolved over the years.
How it all started
India began discussing the inclusion of its Gsecs in global bond indexes as far back as 2013. However, restrictions on foreign investment in domestic debt prevented Indian bonds from qualifying for major benchmarks.
At the time, global index providers sought easier market access, unrestricted foreign participation and smoother settlement mechanisms. India's bond market remained relatively closed, with foreign portfolio investors (FPIs) allowed to invest in Gsecs only through the General Route. Under this route, foreign investors faced several restrictions, including a cap of around 6 per cent of the outstanding stock for investment in Gsecs.
As a result, foreign participation remained limited. FPI holdings of government bonds stood at roughly 1.4 per cent of the market in late 2013 and rose to only about 3.1 per cent by December 2016, according to the Asia Securities Industry & Financial Markets Association (ASIFMA) report.
October 2014
The beginning: Euroclear talks
In 2014, India made its first attempt to liberalise the government securities market. Then RBI Deputy Governor HR Khan said the central bank was working on allowing government bond settlements through Euroclear, the world's largest securities settlement system based in Brussels, Belgium, to ease foreign investor access and attract larger debt inflows. Then finance minister Arun Jaitley had also announced in his Budget 2014-15 speech that the government intended to allow international settlement of Indian debt.
However, differences emerged between the RBI and Euroclear over certain aspects of cross-border settlement of government bonds. According to a Business Standard report, the RBI was opposed to allowing short-term investors such as FIIs to invest in Gsecs through Euroclear, citing the risk of sudden capital outflows. The discussions eventually stalled.
March 2020
FAR becomes the turning point
In a major step towards attracting stable foreign capital and securing global bond index inclusion, the RBI introduced the Fully Accessible Route (FAR) in March 2020, following an announcement in the Union Budget 2020-21. Effective April 1, 2020, the framework allowed foreign investors to purchase designated Gsecs without any investment limits, creating a pool of bonds eligible for global indexes.
The move widened foreign investor access and laid the foundation for India's integration into global bond markets. Since then, the government and RBI have expanded the FAR framework, most recently by including all new issuances of 15-year, 30-year and 40-year Gsecs.
Widely regarded as the most significant reform in India's bond market liberalisation journey, FAR transformed the country's debt market from a largely domestic market into one accessible to global investors. According to an Economic Times report, FPIs have invested ₹8,794.743 crore in FAR securities since its introduction, while total FPI holdings in FAR bonds stood at ₹3.32 trillion in June 2026.
The introduction of FAR quickly began yielding results. In March 2021, FTSE Russell placed India on its watch list for potential inclusion in the FTSE Emerging Markets Government Bond Index (EMGBI). In October 2021, JPMorgan followed by placing Indian government bonds on a watch list for possible inclusion in its Government Bond Index-Emerging Markets (GBI-EM) series.
September 2023
Euroclear discussions revived
As prospects of Indian Gsces being included in global bond indexes improved, reports emerged that the RBI was consulting market participants on the potential impact of enabling sovereign bond settlement through the Euroclear platform.
News of the talks triggered strong market interest, with the benchmark 10-year government bond yield falling 3 basis points to 7.18 per cent. However, a key hurdle remained India's capital gains tax regime, which differed from Euroclear's preference for tax-neutral offshore bond settlement.
Ultimately, the RBI concluded that Euroclear compatibility was not essential for attracting global index investors and continued to rely on the FAR framework. Discussions continued through 2024 and 2025 without a resolution, and Euroclear settlement for Indian Gsecs remains aspirational as of mid-2026, with the recent capital gains tax exemption strengthening the case further.
September 2023
India's first-ever global bond index entry
In September 2023, JPMorgan Chase announced that Indian government bonds would be included in its Government Bond Index-Emerging Markets (GBI-EM) Global Diversified, one of the world's most widely tracked emerging-market local currency bond indexes.
The inclusion covered 27 FAR-eligible government securities, with India receiving the maximum country weight of 10 per cent. The entry was phased in at 1 per cent a month from June 28, 2024, reaching full weight on March 31, 2025. Indian bonds also entered the index with one of the highest average durations and a yield of around 7 per cent.
Today, India holds a 10 per cent weight in the GBI-EM Global Diversified Index and about 8.74 per cent in the broader GBI-EM Global Index, making it one of the largest constituents after China.
March 2024
Second milestone: Bloomberg announces EM Local Currency Index inclusion
In March 2024, Bloomberg Index Services announced that India's FAR-eligible bonds would be included in the Bloomberg Emerging Market (EM) Local Currency Government Index from January 31, 2025.
India entered the index at 10 per cent of its full market value, with its weight increasing by 10 per cent every month until reaching the 10 per cent country cap in October 2025. The inclusion covered the Bloomberg EM Local Currency Government Index, its 10 per cent Country Capped version and related sub-indices. At full weight, India joined China and South Korea as one of the index's largest constituents.
October 2024
FTSE Russell confirms EMGBI inclusion
FTSE Russell confirmed the inclusion of FAR-eligible Indian government bonds in its Emerging Markets Government Bond Index (EMGBI), marking the third major global index inclusion for India's sovereign debt market after JPMorgan and Bloomberg.
Under the decision, India's Market Accessibility Level was upgraded from 0 to 1, with inclusion becoming effective from September 2025. India was expected to account for about 9.35 per cent of the index on a market-value weighted basis. A total of 32 FAR-eligible government bonds, with an outstanding value of about $473.8 billion, qualified for inclusion.
In addition to the EMGBI, eligible Indian bonds were also added to the FTSE Asian Government Bond Index (AGBI) and the FTSE Asian-Pacific Government Bond Index (APGBI).
Bloomberg Global Aggregate ambitions
In September 2025, Bloomberg Index Services launched a formal consultation on the potential inclusion of India's FAR bonds in the Bloomberg Global Aggregate Index, one of the world's most widely tracked fixed-income benchmarks.
The consultation period closed in November, 2025, with a formal decision expected in January 2026. However, Bloomberg deferred its verdict, citing operational and market infrastructure concerns. Investors had flagged issues including settlement delays, post-trade tax processes, limited trading automation and lengthy fund registration timelines.
Despite the delay, India's case for inclusion has strengthened. The government's recent decision to exempt foreign investors from capital gains tax on government securities addresses one of the longstanding concerns raised by international investors and could improve India's chances of eventual inclusion.
From a tightly controlled debt market to a constituent of major global bond indexes, India's journey reflects years of reforms aimed at making its government securities more accessible to international investors.
[The Business Standard]
