Bloomberg delays decision on adding Indian government bonds to global index

In an official update on its ongoing review, BISL said the Indian government bond market has made "meaningful progress" towards meeting the standards required for inclusion, but added that market participants want to see the recent changes become part of regular market practice.

"BISL believes the Indian government bond market continues to make meaningful progress toward meeting the global standards expected for inclusion," the update said.

The index provider noted that since publishing the results of its consultation earlier this year, it has continued discussions with investors, regulators, custodians and other stakeholders, who have broadly recognised the progress made in improving accessibility to India's government bond market.

According to the update, electronic trading capabilities for Indian government bonds have continued to expand, with automated trading platforms now supporting execution across several major investor regions. It also highlighted India's recent decision to remove withholding tax and capital gains tax for eligible foreign investors in government bonds, calling it "a significant enhancement to the market's post-trade framework by reducing operational complexity and improving settlement efficiency."

However, BISL said feedback from market participants suggests that these reforms should become more firmly established before any decision on index inclusion is taken.

"Many market participants would like to see these enhancements become more firmly established in day-to-day market practice before a decision is made on index inclusion," it said.

The update added that while automated trading capabilities continue to expand, respondents said implementation has not yet been completed across all major investor regions. Investors also want to see further evidence that recent market reforms translate into more efficient operational workflows, including improvements to account opening and onboarding processes for foreign investors.

BISL said the Bloomberg Global Aggregate Index is a flagship benchmark for global investment-grade fixed income markets and underpins a wide range of investment products worldwide.

"As the Bloomberg Global Aggregate Index serves as a flagship benchmark... BISL believes it is appropriate that any inclusion decision be supported not only by regulatory and market structure reforms, but also by demonstrated operational efficiency across the diverse range of investors that track and benchmark against the index," the update said.

BISL said it believes "additional time is warranted" for the recent market enhancements to be fully reflected in day-to-day market practice before making a decision on India's inclusion. It added that it will continue engaging with market participants and provide a further update as the review progresses. (ANI)