Bloomberg Defers Call on India Gilts Inclusion for Global Aggregate Index

Bloomberg Index Services Limited has decided to keep its review of Indian government bonds for potential inclusion in the Bloomberg Global Aggregate Index open and ongoing, signalling that a final decision will take more time as operational and market-structure issues continue to be assessed., the index providers said in the statement today.

The update follows months of consultation with global investors and market participants and comes amid heightened expectations in domestic bond markets for a near-term inclusion decision.

In its statement, Bloomberg Index Services said feedback to its consultation showed broad support for the long-term evolution of India’s government bond market and its eventual inclusion in global investment-grade benchmarks. Respondents acknowledged the progress India has made in recent years, particularly in improving market accessibility for foreign investors. A key reform has been the Fully Accessible Route (FAR), which removed major capital controls on select government securities and significantly enhanced their investability for overseas funds.

Bloomberg Index Services  also noted that several respondents flagged operational and market-infrastructure issues that warrant further evaluation before Indian bonds can be added to a flagship index such as the Bloomberg Global Aggregate. These include the absence of fully automated trading workflows, settlement and repatriation timelines linked to post-trade tax processes, and the complexity and duration of fund registration procedures.

While such frictions are familiar to investors in emerging market strategies and were considered acceptable for inclusion in Bloomberg’s emerging market indices, respondents pointed out that the Global Aggregate Index caters to a much broader and more operationally diverse investor base.

Against this backdrop, Bloomberg Index Services said it will continue to engage with index users, investors, custodians, regulators and relevant authorities to better understand whether further efficiencies can be achieved in market infrastructure and post-trade processes.

The index provider plans to issue a further update by midyear 2026, when it will communicate next steps on possible inclusion. In line with its benchmark procedures, any future inclusion decision would be announced well in advance, with at least a one-year gap between announcement and implementation, and inclusion could be phased to ensure an orderly market adjustment.

The decision to extend the review period disappointed sections of the market that had been expecting clarity in early January.

Indian bond markets reacted modestly to the update. The benchmark 10-year 6.48% government bond maturing in 2035 saw its yield rise by nearly 3 basis points to 6.63%, from 6.60% at Monday’s close, reflecting some reassessment of near-term foreign inflow prospects.

India’s government securities are already part of the Bloomberg EM Local Currency Government Index, and that inclusion has supported higher foreign investor participation and improved liquidity. Market participants argue that inclusion in the Bloomberg Global Aggregate Index would be a more significant milestone, given the scale and diversity of funds tracking the benchmark.

Estimates suggest that a 1% weight in the Global Aggregate Index could result in foreign inflows of around $25 billion, spread over 10 to 12 months following inclusion. Such inflows are seen as providing steady support to bond demand rather than a one-off surge.

India has previously benefited from global index inclusion. Its addition to the JPMorgan Emerging Market Bond Index about two and a half years ago led to sustained inflows and greater global visibility. While the Bloomberg review remains open, market participants see the latest update as reinforcing that inclusion is a question of timing and readiness rather than direction.