India’s sovereign bonds to enter Emerging Market Index of FTSE Russell by 2025

FTSE Russell announced on Tuesday, October 8, that it will add India's sovereign bonds to its Emerging Markets Government Bond Index (EMGBI) in September 2025. This decision follows similar inclusions by JP Morgan and Bloomberg, potentially drawing billions of dollars into India’s bond market, Reuters reported.

The London-based index provider also revealed that South Korean government bonds will be added to the FTSE World Government Bond Index (WGBI). These bonds will make up 2.22% of the index based on market value, with inclusion starting in November 2025. South Korea's addition comes after two years on FTSE’s watch list, as per the report by Reuters.

India to Represent 9.35% of the EMGBI

Indian government bonds, which have been on FTSE's watch list for the past three years, will account for 9.35% of the EMGBI. According to FTSE, the index has a total market value of $4.7 trillion, according to the Reuters report.

Boost in Demand for Indian Bonds

The inclusion is seen as a positive development for India’s bond market. "The decision is a sentiment positive and will strengthen the demand side of India bonds structurally,"  Madhavi Arora, chief economist at Emkay Global Financial Services, told Reuters.

Indian bonds have already attracted nearly $18.5 billion in foreign inflows since JPMorgan announced in September 2023 that it would add Indian bonds to its Emerging Markets index, the report further added.

Earlier Delays Due to Tax and Settlement Issues

FTSE had previously delayed the inclusion of Indian bonds in its index during a review in March, citing taxation and settlement issues. However, it acknowledged improvements in India’s bond market accessibility. The latest announcement follows India’s inclusion in JPMorgan’s bond index starting in June 2024 and Bloomberg’s index in January 2025, according to the Reuters report.

What are Government bonds?

Government bond are usually  debt instrument issued by the Central and State Governments of India. Issuance of such bonds occur when the issuing body (Central or State governments) faces a liquidity crisis and requires funds for the purpose of infrastructure development.

(With Inputs from Reuters)