Indian government bond yields continued to remain rangebound and ended flattish on Tuesday, even after Bloomberg Index Services announced the schedule for the inclusion of government bonds in its index.

The benchmark 10-year yield ended at 7.0567%, following its previous close of 7.0601%.

Bloomberg Index Services said on Tuesday it would include 34 Indian government bonds eligible for investment via the country's fully accessible route (FAR) in its Emerging Market Local Currency Index from Jan. 31, 2025.

The inclusion will be phased in over a 10-month period ending October 2025, with the weight of India FAR bonds increased in increments of 10% of their full market value every month during the period.

"It is broadly positive, but the quantum of inflows is very small, and this news was already factored into prices, and hence market is not reacting to this development," said Vikas Goel, managing director at the primary dealer PNB Gilts.

"Compared to JPMorgan, this index is very small, with overall inflows amounting to around $3 billion."

In September, JPMorgan announced the inclusion Indian bonds in its emerging market debt index from June 2025 with traders anticipating inflows of around $25 billion to $30 billion from it.

The Bloomberg index inclusion, on the other hand, is expected bring in around $2.5 billion to $4 billion.

Meanwhile, states continued to undershoot their borrowing calendar, pushing the spread with their central government counterpart lower.

States have borrowed around 555 billion rupees below schedule since February, including 279.81 billion rupees ($3.38 billion) on Tuesday at cutoff yields that were largely in line with market estimates.

The 10-year U.S. yield was above the critical 4.20% mark ahead of a busy week that includes testimony by Federal Reserve Chair Jerome Powell and U.S. February jobs data, which would provide cues on the timing of rate cuts.

($1 = 82.8730 Indian rupees)

(Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman )