India To Be Added To JPMorgan's Emerging Markets Bond Index, Paving Way For Billions Of Dollars In Inflows

JPMorgan has announced that it will add Indian government bonds to its widely tracked emerging market debt index.

This decision is expected to result in significant inflows of billions of dollars into India, which is currently the world's fifth-largest economy.

India's local bonds will be included in the Government Bond Index-Emerging Markets (GBI-EM) index and the index suite, which is used as a benchmark by around $236 billion in global funds, as reported by JPMorgan.

Starting from 28 June 2024, the securities will be added to the index.

India will have a maximum weight of 10 per cent on the index, according to a statement.

JPMorgan has announced that 23 Indian Government Bonds (IGBs) with a total notional value of $330 billion are eligible for inclusion.

These bonds are classified as "fully accessible" for non-residents.

“India's weight is expected to reach the maximum weight threshold of 10% in the GBI-EM Global Diversified, and approximately 8.7% in the GBI-EM Global index," JPMorgan said.

Inclusion will start on 28 June 2024, and extend over 10 months with 1 per cent increments on its index weighting, as India is expected to reach the maximum weighting of 10 per cent, JPMorgan said.

Mukesh Kochar, AUM Capital's national head for wealth, was quoted by Livemint as saying, "This is great news and one of the long-awaited ones by the market. This JP Morgan index is $240 billion. India will be 10% of it which means $24 billion which is huge. This will reset the base rate for India and the yield should come down sharply. India's cost of borrowing will come down".