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On July 10, 2026, the Reserve Bank of India (RBI) will auction ₹32,000 crore of Government Securities [1], settling on July 13. While this appears to be a regular weekly installment in the borrowing calendar, it is actually more complex. It is an opportunity to evaluate two opposing forces in India’s bond market: record-setting supply from the Government of India and record-setting, index-related, foreign demand. Here is what the data has to say about it.
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What’s for Sale in the Auction
- 6.36% GS 2031 worth ₹21,000 crores (date of maturity: Feb 16, 2031)
- 77.1% GS 2066 worth ₹11,000 crores (date of maturity: May 18, 2066)
- a greenshoe option for up to ₹2,000 crores per security
Bidding is through the e-Kuber system with a multiple-price auction format. Results and payments for the auction will be done on July 13. Bids may also be placed through the RBI Retail Direct, with a minimum bid of ₹10,000.
The Supply-Side Case: Why Pressure Is Real
This auction sits inside an unusually heavy borrowing year:
| Metric | FY27 Figure |
| Gross market borrowing (Budget estimate) | ₹17.20 lakh crore [2] |
| Gross market borrowing (revised, post-switches) | ₹16.09 lakh crore [2] |
| H1 FY27 borrowing target | ₹8.20 lakh crore [2] (51% of full year) |
| Bond redemptions in FY27 | ₹5.5 lakh crore [3] (vs ₹3.3 lakh crore in FY26) |
| 10-year share of H1 borrowing | 29% [4] |
| 50-year share of H1 borrowing | 9.6% [4] |
Sources: PIB, DMI
The jump is largely attributed to a heavier redemption schedule rather than excessive new spending, but the market still has to absorb it. However, one signal argues the opposite: In the underwriting auction for this ₹32,000 crore issue, primary dealers accepted the full notified amount at very low underwriting commissions, indicating that they anticipate very little risk in the auction, even at the very ultra-long 2066 end.
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The Demand-Side Case: Why Index Money Is Absorbing It
Foreign appetite for Indian G-Secs has surged just as this heavy supply lands:
- Foreign Portfolio Investors (FPIs) invested a record-breaking ₹39,640 crores [5] in June 2026, the most they have ever invested in a month, with the previous record being ₹22,005 crores in August 2024
- FPI debt inflows for June touched ₹55,518 crores [6] and, for the first time this year, exceeded outflows from equities
- FPI inflows in Fully Accessible Route (FAR) bonds reached ₹21,652 crores [6] by June 25, 2026, with June contributing approximately 58% of the inflows for the year
- RBI’s June expansion of the FAR, to cover newly issued bonds with 15, 30, and 40-year maturities, and a tax exemption for eligible FPIs on interest and capital gains in the newly issued bonds, caused this rapid increase in inflows
- Estimates say that India’s earlier full weight (10%) inclusion in the JP Morgan GBI-EM index alone brought in US$20-25 billion [7] in 10 months, and a likely inclusion in the Bloomberg Global Aggregate would bring another US$20-22 billion
Supply vs Demand: Which Comes Out on Top
| Force | Supporting Data |
| Supply pressure | ₹16.09 lakh crore full-year gross borrowing; ₹8.20 lakh crore H1 alone; heaviest redemption year on record |
| Demand cushion | Record ₹55,518 crore FPI inflow in June; full PD underwriting take-up at low commission; structural index-linked buying still building |
Demand is absorbing supply, as opposed to the opposite. The heavy issuance calendar is a reality. However, this is happening at a time foreign capital is coming in at unprecedented levels, being driven by tax and access reforms and not by a short-term play. This is likely why the 7.71% GS 2066 case is being underwritten more smoothly than other deals. The real risk here is not this auction but whether index-linked inflows are likely to keep pace after the current policy-driven inflow normalizes, and especially for the remaining ₹7.89 lakh crore in borrowing for the second half of FY27.
Sources
- https://newsonair.gov.in/rbi-to-auction-rs-32000-crore-government-bonds-on-july-10/
- https://www.pib.gov.in/PressReleaseDetail.aspx?PRID=2246257®=1&lang=1
- https://www.dmifinance.in/wp-content/uploads/2026/02/Union-Budget-FY27-Report.pdf
- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2246257®=48&lang=2
- https://goldenpi.com/blog/bond-news/indias-bond-market-in-june-2026/
- https://www.thehindu.com/business/Economy/how-sustainable-is-the-record-flow-of-fpis-into-indian-bonds/article71189343.ece
- https://goldenpi.com/blog/bond-news/the-index-effect-why-indias-bond-market-is-attracting-billions/
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