India’s Sovereign Bonds Set to Join FTSE Russell Emerging Market Bond Index by 2025
FTSE Russell has announced India’s sovereign bonds are going to be added to its Emerging Markets Government Bond Index in September 2025. This is in addition to the inclusion decisions by JP Morgan and Bloomberg, which could attract billions of dollars of foreign investment to India’s bond market. This announcement was made by FTSE Russell on October 8. Reports state that the move will bring billions of dollars to the market, hence thereby improving India’s financial standing.
Besides India, FTSE Russell will include South Korean government bonds in its World Government Bond Index (WGBI). Its inclusion will be in November 2025 when the country’s bonds will constitute 2.22% of WGBI according to its market value. It comes after South Korean bonds have appeared on FTSE’s watch list for two consecutive years where the country’s bonds have featured together with improving accesses and market infrastructure.
India is going to account for a sizeable portion of the EMGBI
Indian government bonds that were on FTSE’s watch list for three years will form a significant percentage of the EMGBI. Indian bonds are ready to place 9.35% in the index holding a total market value of $4.7 trillion. The inclusion of Indian bonds will make a big impact on the country’s bond market with which demand for these bonds is likely to increase.
According to experts, this decision structurally fortified the bond market of India from which point onwards foreign interest and long-term investments took a huge boost. In fact, the Indian bond market has already seen a strong inflow of foreign money amounting to $18.5 billion since JP Morgan announced its plan to add Indian bonds in September 2023.
The momentum is sure to build with other financial giants including more names in global indices.
Past Obstacles Overcome
India’s inclusion in global bond indices had earlier faced a review from FTSE that identified tax and settlement issues back in March. However, the latest development in India’s bond market that increased accessibility for easier flows has described this move as an update. This comes after India’s entry into JP Morgan’s Emerging Markets Bond Index back in June 2024 and comes to Bloomberg’s list in January 2025, showing increased acceptance of Indian bonds in the global markets.
A Growing Market for Government Bonds
Government bonds are debt instruments issued by the central and state governments of India. Indian bonds are issued usually when liquidity constraints are, for one reason or the other, forcing the government to raise funds for infrastructure development or other projects. The inclusion of Indian bonds in a supposedly elite class of global indices is likely to draw more foreign investment into the country besides securing a relatively stable source of financing for India’s future growth initiatives.
Its addition to multiple global indices over the next few years is going to bring about a sea change in the country’s bond market. It would increase international exposure, and the demand for its bonds would be higher along with a possibility of increasing confidence about economic stability in India, making it an attractive destination for global investors.
