Sept 30 (Reuters) - Global index provider FTSE Russell said India will remain on the watch list for inclusion in the FTSE Emerging Markets Government Bond Index (EMGBI), dashing market hopes that FTSE would announce its entrance into the index.

India will also remain on the watch list for a potential upgrade to Market Accessibility Level 1, the index provider said on Thursday, which indicates an improved ease of foreign access to local markets.

"FTSE Russell continues to engage with its index users and Indian market authorities regarding ongoing market structure reforms, with a focus on securities that are available via the Fully Accessible Route channel," it said in its annual country classification review.

India had removed foreign investment restrictions on those government securities in 2020 as part of an effort to enter global bond indices, but its stance on other issues including capital gains taxes and local settlement have hampered its inclusion.

Reuters reported this week that India's entry into JPMorgan's influential emerging market debt index is set to be pushed into next year because of a number of issues New Delhi needs to address. (Reporting by Juby Babu in Bengaluru and Ira Dugal in Mumbai; Editing by Jamie Freed)