Without tax breaks or other incentives, India's small investors are unlikely to flock to government securities even with easier access, not least because they can get better returns from other savings products, traders say.

That is in sharp contrast to foreigners' appetite for Indian government debt -- their investment limits are nearly exhausted.

"By itself, whatever medium you create, interest is likely to be muted from individuals. In most deep markets, money is routed through a pooled fund mechanism, through institutions," said Ashish Parthasarthy, treasurer at HDFC Bank.

Globally, sovereign debt is usually held by a clutch of institutions with minimal retail participation, and in India too, the current share of retail investors is much less than 1 percent out of the total USD 635.75 billion outstanding.

But the RBI paved the way for that to change earlier this month, betting that more retail investors will stabilise demand.

It has in the past criticised primary dealers for failing to do enough to put government bonds within the reach of average investors.

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