MUMBAI, Jan 25 (Reuters) - Indian government bond yields were expected to remain largely unchanged early on Wednesday, as traders awaited auction of the country's first-ever sovereign green bonds later in the day.

The benchmark 10-year yield could move in the 7.33%-7.37% range, a trader with a private bank said. The yield ended at 7.3453% on Tuesday.

"The market is decently positioned and all eyes would be on the demand and cutoffs of the green bonds," the trader said.

The government plans to raise 160 billion rupees ($1.96 billion) through the green bonds in this fiscal ending March 31, with the first tranche of 80 billion rupees scheduled for auction later in the day.

The Reserve Bank of India (RBI) will sell 40 billion rupees each of five-year and 10-year bonds.

The government expects to issue its first green bonds at a "greenium," with yields below prevailing market rates, and has identified 400 billion rupees in projects that can be funded with the proceeds, said two government sources.

"Green bonds should command a premium because of the mandates to invest in these securities. The outstanding (amount) will be quite small initially and because of the nature, we may see a bit of aggressive demand," said Ashish Agrawal, head of FX and EM macro strategy research, Asia, Barclays.

The auction of green bonds would be followed by 300 billion rupees of debt sale on Friday, including the liquid 14-year paper.

The Indian market will remain closed on Thursday.

Meanwhile, major focus remains on the Feb. 1 Union budget, with the government's fiscal consolidation path and borrowing calendar for fiscal 2024 set to be the next trigger.

The government will borrow a record 16 trillion rupees in the fiscal year ending March 2024, according to a Reuters poll of economists. KEY INDICATORS:

** Brent crude futures up 0.7% at $86.80 per barrel, after easing 2.3% in previous session

** 10-year U.S. Treasury yield at 3.4527% and two-year note at 4.1538%

** India to sell sovereign green bonds worth 80 billion rupees

** RBI to set underwriting fees for 80 billion rupee sovereign green bond auction

** RBI to auction Treasury Bills worth 290 billion rupees ($1 = 81.6190 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)