In a significant move, Indian government bonds are set to be included in the Bloomberg Emerging Market (EM) Local Currency Government Index and related indices starting January 31. This inclusion is expected to attract further foreign fund inflows from global investors, strengthening India’s bond market on the global stage.
India’s Fully Accessible Route (FAR) bonds will be gradually included in the index over a 10-month period, reaching full weight by October 2025. The announcement was made in March 2024.
“Such global recognition of Indian bonds would strengthen India’s bond market, improve liquidity, and pave the way for increased investments in corporate bonds over time,” said Vishal Goenka, Co-founder of
The initial weight of Indian FAR bonds in the index will be 10 percent of their market value, increasing by 10 percent each month until they reach full market value weighting in October. The indices impacted by this move include the Bloomberg EM Local Currency Government Index, the Bloomberg EM Local Currency Government Index 10 percent Country Capped Index, and related sub-indices.
Once fully phased in, India is expected to join China and South Korea as one of the three largest markets in the Bloomberg Emerging Market 10 percent Country Capped Index. Based on data from January 31, 2024, the index will include 34 Indian securities, making up about 7.26 percent of a $6.18 trillion market value-weighted index.
This marks the second major global index to include Indian bonds, following JP Morgan’s decision to add them from June 28, 2024. Since JP Morgan announced its inclusion of Indian bonds in its global index, investments in FAR bonds have already reached about $7.55 billion as of January 21, 2025, according to the Clearing Corporation of Indian Ltd (CCIL) data.
Despite the top five countries accounting for nearly 80 percent of the weightage in the MSCI Emerging Market Index, India has shown remarkable growth in recent years. CLSA, a global brokerage firm, recently shifted its “tactical allocation” to India from China, citing growing concerns over Beijing’s economy and investor sentiment following the US presidential election.
