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India completes two bond-index inclusions, Bloomberg Global Aggregate deferred

JPMorgan and Bloomberg EM phases closed; a third benchmark waits on settlement and tax reforms India is now racing to deliver

Money· active The Long Game·Whose Money ·7 takes · ·rbtfl upd Jun 27, 2026

Summary

India has completed two of three major global bond-index inclusions it has pursued since 2024. JPMorgan phased India into its GBI-EM Global Diversified Index between June 2024 and March 2025, reaching the 10% country cap; 23 FAR-route Indian Government Bonds with a combined notional of $330 billion are now included. Inflows over the phase-in were estimated at $21-40 billion. Bloomberg completed India's inclusion in its EM Local Currency Government Index between January and October 2025, adding 34 FAR securities at a 10% country cap, on par with China and South Korea. The third milestone, inclusion in the Bloomberg Global Aggregate Index, was deferred in January 2026, with Bloomberg citing settlement delays, post-trade tax process gaps, limited trading automation and lengthy fund registration timelines. In direct response, the government promulgated the June 5, 2026 tax ordinance (see India exempts FPIs from G-sec taxes, bond inflows jump sixfold to ₹39,640 crore in June) and the RBI expanded FAR to cover all new 15-, 30- and 40-year G-secs. A mid-2026 Bloomberg review is the next gate. FPI holdings in FAR securities now stand at ₹3.58-3.75 lakh crore, 3.34% of outstanding G-secs, well below the 6% statutory ceiling.

The split

Indian coverage frames the journey as a triumphal progression toward deeper global integration. The global capital-markets view is more clinical: GBI-EM and Bloomberg EM are EM-specialist mandates; the Global Aggregate is the mainstream fixed-income benchmark tracked by insurance and pension funds. The difference in passive inflow potential is an order of magnitude. Bloomberg's deferral conditions (settlement delays, tax friction, automation) were structural, not diplomatic, and the operational gaps they cited predate the index conversation.

By the numbers

  • June 2024 to March 2025, JPMorgan GBI-EM phase-in timeline; 1pp/month to 10% cap
  • 23 bonds / $330bn notional, JPMorgan FAR bond universe
  • $21-40bn, estimated inflows from JPMorgan phase-in
  • January to October 2025, Bloomberg EM Local Currency phase-in; 34 FAR securities
  • 10%, Bloomberg EM country weight for India (same cap as China, South Korea)
  • January 2026, Bloomberg Global Aggregate deferral; next review mid-2026
  • ₹3.58-3.75 lakh crore, FPI FAR holdings as of June 2026
  • 3.34% of ₹112.42 lakh crore total outstanding G-secs, FPI penetration

Why it matters

Passive index inclusion turns a government-bond market into a recurring destination for global capital flows regardless of active sentiment. The Bloomberg Global Aggregate commands roughly $5-7 billion in estimated passive flows for India. The tax ordinance and FAR expansion are the most direct reforms India has taken to meet the outstanding conditions; whether Bloomberg is satisfied determines whether those flows arrive in 2026 or are deferred further.

What to watch

  • Bloomberg Index Services mid-2026 review announcement (expected July-August 2026)
  • Whether settlement T+1 timelines and trading automation have improved enough to meet Bloomberg's threshold
  • FPI limit utilisation trajectory: at 3.34% vs. 6% ceiling, there is room for a significant inflow without regulatory caps biting
  • India's share in Bloomberg Global Aggregate relative to EM peers if inclusion proceeds