Bond market push: Govt eyes Bloomberg index inclusion with latest G-Sec reforms

The federal government’s current measures to spice up overseas portfolio funding (FPI) in Authorities Securities (G-Secs) are geared toward enhancing India’s possibilities of securing inclusion in Bloomberg’s flagship World Combination Bond Index, authorities sources mentioned on Tuesday, PTI reported.Final Friday, the Centre unveiled a sequence of reforms to extend FPI participation in G-Secs and deepen the home bond market.The measures included tax exemptions on curiosity earnings, long-term capital good points (LTCG) and short-term capital good points (STCG), enlargement of specified securities beneath the Absolutely Accessible Route (FAR), and streamlined funding norms.The Reserve Financial institution of India (RBI) additionally introduced a slew of measures on Friday to draw overseas capital inflows.“We’re hopeful that the steps taken final week on G-secs will assist authorities bonds get included within the Bloomberg World Combination Bond Index,” authorities sources mentioned.In accordance with sources, inclusion within the index wouldn’t solely deepen India’s bond market but in addition appeal to larger passive fund inflows.To deal with points associated to India’s inclusion within the index, the finance ministry held 4 conferences with three RBI deputy governors dealing with completely different portfolios during the last two months, sources mentioned, including that the reforms had been particularly designed to deepen the bond market.In January, Bloomberg had mentioned it was reviewing India’s inclusion within the USD 3-trillion World Combination Bond Index, with the following replace anticipated by mid-2026.“We should always have gotten into the Bloomberg World Combination Index in January. Efforts in the direction of that started round two months in the past, and inclusion was very a lot on high of our minds,” sources mentioned.India formally entered the JP Morgan Authorities Bond Index-Rising Markets on June 28, 2024.