The reason for lukewarm response in interest rate product partially lies in the structure of our debt markets. The government bond holding is concentrated amongst banks, insurance companies, provident/pension funds and the Reserve Bank of India. The same goes for corporate bonds as well.
Most of these investors are hold-to-maturity types who do not face volatility in the value of their holdings and consequently have no need for a hedging product. Secondly, there is perhaps a lack of diversity of view among the market participants.