The much-anticipated entry of Indian sovereign debt into the Bloomberg Global Aggregate Index has hit a roadblock. In a statement released on January 13, 2026, Bloomberg Index Services Ltd (BISL) confirmed it would hold off on including India’s Fully Accessible Route (FAR) bonds, citing the need for further evaluation of the country’s market infrastructure.
Why Was the Inclusion Delayed?
Despite “broad support” for the long-term trajectory of the Indian debt market, global investors raised specific operational concerns during the consultation period. The primary hurdles include:
- Operational & Infrastructure Gaps: Investors highlighted the lack of fully automated trading workflows and lengthy fund registration procedures.
- Settlement & Tax Processes: Concerns remain regarding repatriation delays tied to post-trade tax processes.
- Market Diversity: While India has made strides with its FAR securities, the Global Aggregate Index serves a more diverse investor base than emerging market-specific indices, requiring higher standards of efficiency and liquidity.
Immediate Market Reaction
The news sent ripples through the Indian debt market, which had already priced in a positive outcome.
- Yield Spike: The benchmark 10-year Indian government bond yield jumped by approximately 5–6 basis points, rising to 6.63% shortly after the announcement.
- Unwinding of Positions: Many foreign investors had built “pre-positioning” trades in anticipation of the inclusion. The deferral triggered a sell-off as these traders unwound their long positions.
- Inflow Disappointment: Analysts from Goldman Sachs and Morgan Stanley had estimated that inclusion could have triggered $10 billion to $25 billion in passive inflows over a 10-month period. These funds are now on hold.
| Metric | Pre-Announcement | Post-Announcement |
| 10-Year Bond Yield | ~6.60% | 6.63% – 6.64% |
| Projected Inflows | $25 Billion | Deferred |
| Next Review Date | January 2026 | Mid-2026 |
The Road to Mid-2026
Bloomberg has not closed the door on India. The index provider stated it will keep the review open and continue to engage with the Reserve Bank of India (RBI), custodians, and regulatory authorities to address infrastructure challenges.
India is already a part of other major indices, including:
- JPMorgan Emerging Market Local Currency Index (Joined June 2024)
- Bloomberg EM Local Currency Bond Index (Joined January 2025)
- FTSE Russell Emerging Market Index (Joined September 2025)
The delay in joining the Global Aggregate index—a “flagship” investment-grade benchmark—suggests that while India is a leader in the emerging market space, it still has work to do to meet the rigorous operational standards of the world’s largest bond index.
Conclusion
While the delay is a short-term setback for bond prices and the Rupee, the underlying sentiment remains constructive. Bloomberg’s commitment to a mid-2026 update provides a clear window for the Indian government to streamline post-trade processes and automated workflows.
