Indicator light doesn't come on when i shift to neutral

SOURCE: neutral lights is out, with kickstand down and in

The normal interlock on Yamahas is that you cannot crank starter if the machine is in gear with sidestand down. If you flip the sidestand off, it will start if the clutch is pulled in.
The problem is your bike is in neutral but the safety interlock relays are not seeing it and this is keeping the neutral lamp off also. Inspect the wiring on the left side of chassis near the engine...you should see a harness with a single sky blue wire, thats for neutral switch. The circuit grounds down at the neutral switch which is mounted inside crankcase.Ensure the connector from switch is clean and secure...if neutral light still doesn't work, unhook connector and temporarily ground the upper section of the harness...should see light illuminate, it it does, the issue is in the neutral switch in the crankcase.
The switch screws onto crankcase and there is a spring loaded brass pin that is fastened to shift drum that rotates across the inner face of the switch as you shift gears...when you reach neutral...the brass pin makes contact under the terminal, grounding the circuit, causing the neutral light and your interlocks to be satisfied.
The brass pin wears over time so it may be losing contact when you are in neutral. if necessary replace the brass pin ("neutral point ") and the spring "compression spring") found in the shift cam fork section of the parts diagrams.

SOURCE: I have a '96 YZF600R (Thundercat) that has an

hi, the neutrol light operates on a live earth basis, the feed to the bulb is constantly live, the idea is when you place the bike into neutrol, the contact on the end of the gear selector drum aligns with the switch on the crankcase and presto makes contact completing the earth live circuit, poss problems include, faulty external switch,or (contact) inside gearbox, most likely traped wire inside front sprocket cover, going to earth check wireing, or the side stand switch faulty, or incorectly fitted poss wire from neutrol light has been conected to wrong wire.