India's bond rally has stalled. The RBI is the reason the short end is now vulnerable.

India's government bond market has spent the last several months repricing the limits of RBI support. The 10-year yield spread over the policy repo rate reached a two-year high after the RBI's June cut, an outcome that should not be possible if easing cycles drive yields lower but becomes explicable once you see the plumbing: the RBI bought heavily early in the cycle, the cash reserve ratio has already been cut, and analysts now expect significantly less new purchasing in H2. Axis Mutual Fund estimates gross long-bond supply at 11.98 trillion rupees, exceeding what insurance, pension, and provident funds can absorb at current rates. DSP Asset Managers has publicly cut longer-duration exposure, and a Bloomberg poll of 11 traders puts the 10-year yield near 6.5% at year-end. The second-order risk is corporate: higher sovereign yields compress the transmission of RBI cuts into actual borrowing costs for Indian businesses, which undermines the growth case that justified the easing cycle in the first place. For UK investors in Indian fixed income or EM debt funds with Indian exposure, this is the moment to check duration.