Bloomberg Delays Indian Government Bond Inclusion, Citing Operational Issues

Bloomberg Index Services Limited (BISL) has deferred the inclusion of Indian government bonds in its Global Aggregate Index, citing the need for further assessment of operational and market-infrastructure issues. The index provider said it would provide an update on the review by mid-2026.

While a majority of respondents to BISL’s consultation expressed confidence in the long-term development and prospects of India’s government bond market, a section of market participants flagged concerns related to operational efficiency and post-trade infrastructure, BISL said on Tuesday. These issues, it added, require further review before Indian government bonds can be included in the flagship global index.

Flagged Issues

The concerns centre on the absence of fully automated trading workflows, uncertainties around settlement and repatriation timelines linked to post-trade tax processes, and the complexity and length of fund registration procedures, according to a report by Business Standard.

“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,” Business Standard reported, citing a BISL note.

Following the announcement, India’s 10-year benchmark government bond yield rose by 3 basis points to 6.63%, reflecting disappointment among market participants who had been positioning for potential index-driven inflows. Bond prices and yields move inversely.

The G-Sec Market Context

The muted response of government bond yields despite sharp policy rate cuts has heightened expectations around global index inclusion. The Monetary Policy Committee of the Reserve Bank of India cut the benchmark repo rate by 125 basis points in 2025, bringing it down to 5.25% in December, from 6.50% at the end of 2024.

Market participants had expected inclusion in the Bloomberg Global Aggregate Index to attract fresh foreign portfolio inflows, improving demand for government securities and aiding rate transmission.

The absence of such inflows comes at a time when overseas investor participation in Indian debt markets has remained cautious, following FPI outflows last year, driven by rupee depreciation and concerns over the potential impact of US tariff policies on the Indian economy.

The deferral of index inclusion, therefore, removes a key near-term catalyst for bond demand, even as confidence in the long-term evolution of India’s government bond market remains intact.