India To Be Added To Bloomberg EM Bond Index In January 2025

Bloomberg has proposed to add Indian government bonds to its various indices starting from January 2025.

Bloomberg said it will include India Fully Accessible Route bonds in the Bloomberg Emerging Market Local Currency Government Index and related indices in a phased manner over a 10-month period, starting Jan. 31, 2025.

Indian FAR bonds will be included in the Bloomberg EM Local Currency Government indices with an initial weight of 10% of their full market value on Jan. 31, 2025, according to the press release.

The weight of Fully Accessible Route bonds will be increased in increments of 10% of their full market value every month over the 10-month period ending in October 2025, at which point they will be weighted at their full market value in the indices.

"The indices in scope for inclusion include the Bloomberg EM Local Currency Government Index, the Bloomberg EM Local Currency Government Index 10% Country Capped Index, and all related sub-indices," the release said.

Once completely included in the Bloomberg Emerging Market 10% Country Capped Index, India is expected to join both China and South Korea as markets that reach the 10% cap.

Within the market cap weighted version of the index, India is expected to be the third largest country after China and South Korea. Using data as of January 31, 2024, the index would include 34 Indian securities and represent 7.26% of a $6.18 trillion index on a market value weighted basis.

“The Indian economy is on a steady growth trajectory and inclusion of Indian FAR Bonds in our Emerging Market Local Currency Government Index marks a key milestone amidst the measures India has taken to open its bond markets," said Nick Gendron, Global Head of Fixed Income Index Product at Bloomberg Index Services.

Bloomberg Indices is committed to serving the global investment community and this development will increase access to, and participation in, Indian markets, Gendron said.

Bloomberg Indices will create an ex-India version of the EM Local Currency Government Index and can also create other standard and custom versions of the index, the release said.

Bond Inflows

India's bond market started the year by logging the highest-ever foreign inflows in the first two months.

This momentum is mainly fuelled by the domestic gilt inclusion in the JPMorgan Bond Index and the government's aggressive fiscal deficit target for the upcoming year.

Foreign inflows into Indian debt stood at Rs 41,906 crore so far this year, with Rs 19,837 crore in January and Rs 22,419 crore in February, according to the data from the National Securities Depository Ltd. February saw the highest monthly inflow in over seven years, while the previous highest was seen in June 2017 at Rs 25,685 crore.

Since the announcement of Indian government bonds in the JPMorgan emerging-market index in September last year, the debt market has seen an inflow of over Rs 81,800 crore.