Global index provider FTSE Russell will include India’s sovereign bonds in its Emerging Markets Government Bond Index (EMGBI) starting September 2025. The index provider made this announcement late Tuesday night.
FT also said that Indian bonds will represent 9.35% of the index on a market-value weighted basis. According to Japanese bank MUFG, India’s inclusion into FTSE Russell’s emerging market global bond index will likely lead to inflows of $2 billion to $5 billion. Indian securities were on the index provider’s watch list for the last three years.
Starting from September 2025, local currency, fixed-rate Indian government bonds eligible under the FAR will be included in the FTSE EMGBI, as well as the regional FTSE Asian Government Bond Index (AGBI) and FTSE Asian-Pacific Government Bond Index (APGBI), and indices that derive their membership from them. Inclusion will be phased-in on a monthly basis over a six-month period in six equal tranches. With the inclusion, market participants are expecting around $4 billion foreign inflows to hit the government securities market.
“While in terms of inflows, it will translate into just around $4-$5 billion over a period of six months, but incrementally it is a positive for the market. However, will this lead to inclusion of Indian government bonds into Bloomberg’s Global Aggregate Bond Index is something we need to assess,” said Gaura Sengupta, Chief Economist at IDFC First Bank.
In its earlier review in March, FTSE had deferred inclusion of Indian bonds in its index due to taxation, registration and settlement issues but acknowledged India’s progress in the accessibility of the securities.
In March 2021, India was added to the FTSE Watchlist for reclassification of its Market Accessibility Level from 0 to 1, and consideration for inclusion in the FTSE Emerging Market Government Bond Index (EMGBI). India’s inclusion in FTSE EMGBI was last reviewed in September 2023, when the global index provider had decided to defer the inclusion.
Earlier in June, Indian government bonds were included in the JP Morgan’s Government Bond Index-Emerging Market Suite. Since the inclusion, around $11 billion foreign inflows have already hit the government securities market. In addition to the JP Morgan index, Bloomberg had also announced inclusion of the Indian government securities called fully accessible route (FAR) bonds in the Bloomberg Emerging Market (EM) Local Currency Government Index and related indices.
FTSE’s announcement follows inclusion of Indian government securities in JPMorgan’s Government Bond Index-Emerging Markets index starting in June 2024 and Bloomberg Index Services’ Emerging Market Local Currency starting in January 2025.