At 9:21 a.m. (0351 GMT), the 10-year benchmark bond yield was at 8.16 percent, down from Monday's close of 8.17 percent, after slipping to 8.14 percent in early trade.

The Reserve Bank of India will announce its rate decision at 11:00 a.m. (0530 GMT). It is likely to hold its key interest rate steady, a Reuters poll of 22 economists showed.

Late on Monday, the RBI said the growth outlook and business climate have weakened but warned of upwards risks to inflation.