The government’s recent measures to boost foreign portfolio investments (FPI) in government securities (G-Secs) are aimed at improving India’s chances of securing inclusion in the Bloomberg Global Aggregate Bond Index, government sources said on Tuesday.Last Friday, the Center unveiled a series of reforms to increase FDI participation in G-Secs and deepen the domestic bond market.The measures included tax exemptions on interest income, long-term capital gains (LTCG), short-term capital gains (STCG), expansion of securities specified under the Full Access Route (FAR), and simplification of investment standards.The Reserve Bank of India (RBI) also announced a series of measures on Friday to attract foreign capital inflows.“We hope that the steps taken last week regarding G-secs will help government bonds be included in the Bloomberg Global Aggregate Bond Index,” government sources said.According to sources, inclusion in the index will not only deepen the Indian bond market but will also attract higher inflows from passive funds.To address issues related to India’s inclusion in the index, the Finance Ministry held four meetings with three RBI deputy governors handling different portfolios over the past two months, the sources said, adding that the reforms were specifically designed to deepen the bond market.
In January, Bloomberg said it was reviewing India’s inclusion in the $3 trillion global aggregate bond index, with the next update expected by mid-2026.“We should have entered the Bloomberg Global Aggregate Index in January. Efforts to achieve this began about two months ago, and inclusion was very much at the top of our priorities,” the sources said.India officially entered the JP Morgan Emerging Markets Government Bond Index on June 28, 2024.
