India will be included in JP Morgan's Government Bond Emerging Markets Index from June 2024

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Mumbai: JPMorgan Chase & Co. has decided to include Indian government bonds in its benchmark government bond emerging-market index from June 2024. The inclusion of Indian bonds is estimated to spur foreign investment flow of billions of dollars into the country's debt market. The primary estimate of which is currently being put up to 30 billion dollars.

The index provider will begin inclusion of Indian securities in the JPMorgan Government Bond Index-Emerging Markets from June 28, 2004. These Indian government bonds will be included at the rate of one per cent per month for 10 months till March 31, 2025. Currently, 23 Indian government bonds with a combined notional value of $330 billion are eligible for inclusion in this index. Indian bonds will be included on the basis of one per cent per month. A statement said that the maximum weightage of India in this index will be 10 percent.

JP Morgan's decision comes in the wake of the Indian government's introduction of fully foreign-owned bonds in 2020, along with other incentives to attract foreign portfolio investment inflows.

According to figures from the Clearing Corporation of India, foreign investors have increased their holdings in such bonds from $7.4 billion at the end of 2022 to $12 billion in anticipation of inclusion in JP Morgan's emerging bond index.

It is worth mentioning that foreign investors have bought Indian government debt worth 3.5 billion dollars in the current year. On the other hand, India is becoming a top investment attraction in equity this year. Following the decision to include Indian government bonds in the JP Morgan Government Bond Index-Emerging Markets Index, a possibility of Indian government bonds being included in the Bloomberg Global Aggregate Index is also being shown.

The chances of joining the Bloomberg Global Index increased

After joining the JP Morgan Emerging Market Bond Index, India's chances of joining the Bloomberg Global Aggregate Index have also increased. If India is included in the Bloomberg Global Aggregate Index, it can increase the flow of money to India by 15 billion to 20 billion dollars.

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