India eyes Bloomberg Global Aggregate Index entry with latest G-sec reforms

The government's recent steps to boost foreign portfolio investment in Government Securities are aimed at securing the inclusion of sovereign bonds in Bloomberg's flagship Global Aggregate index, government sources said on Tuesday.

Last Friday, the government introduced a series of reforms to increase Foreign Portfolio Investor (FPI) participation in Government Securities (G-Secs) to deepen the capital market.

Key measures included tax exemptions on interest income, long-term capital gains (LTCG) and short-term capital gains (STCG), expansion of specified securities under the Fully Accessible Route (FAR), and streamlined investment norms.

Besides, the RBI also announced a slew of measures to attract foreign capital inflow in the country on Friday.

We are hopeful that the steps taken last week on G-secs will help government bonds get included in the Bloomberg Global Aggregate Bond Index, government sources said.

The inclusion would not only deepen the bond market but also increase the inflow of passive funds.

To address the issue of inclusion of G-secs in the Index, the finance ministry held four meetings with three RBI Deputy Governors handling various portfolios in the last two months, sources said, adding that these measures were tailor-made to deepen the bond market.

In January, the index provider had said it was reviewing India's inclusion in the $3-trillion index, with the next update expected by mid-2026.

"We should have got into the Bloomberg Global Aggregate Index in January. Efforts towards that began around two months ago, and inclusion was very much on top of our minds," sources said.

India officially entered the JP Morgan Government Bond Index-Emerging Markets on June 28, 2024.

(Except for the headline, Fortune India has not edited the content of this PTI report.)