FTSE Russell postpones adding India to its EM Government Bond Index

India will remain on the FTSE Fixed Income Country Classification Watch List for the potential reclassification of its Market Accessibility Level from 0 to 1, and for consideration for inclusion in the FTSE Emerging Markets Government Bond Index (EMGBI).

In March 2021, FTSE had added India to the FTSE Fixed Income Country Classification Watch List for the potential reclassification of its Market Accessibility Level.

The FTSE Russell has taken note of feedback from international investors regarding areas for improvement in India's market accessibility level, including the efficiency of Foreign Portfolio Investor (FPI) registration, operational issues related to the settlement cycle, trade matching, and the tax clearance process.

FTSE Russell will continue to engage with the Reserve Bank of India (RBI) and seek feedback from market participants on their practical experiences of the evolution of the market structure.

The potential reclassification of India's Market Accessibility Level and its inclusion in the FTSE EMGBI could have significant implications for India's bond market and the country's standing among global investors.

The decision to keep India on the watch list indicates that there is still work to be done to improve the market accessibility level and address the concerns of international investors.

Bond traders though were not expecting the inclusion of India in this review after government seemed to cool on the idea amid global market volatility.

“India shouldn’t be looking at inclusion at the current juncture given the global situation”, Economic Affairs Secretary Ajay Seth said in February.

India's inclusion in the FTSE EMGBI could bring in substantial foreign investment into the country's bond market, which could boost economic growth and development.

The RBI's efforts to improve market infrastructure and investor confidence could go a long way in ensuring India's inclusion in the index and improving the country's overall financial standing on the global stage.

For inclusion in the FTSE World Government Bond Index (WGBI), FTSE Russell has kept South Korea and Switzerland on the watchlist.