The inclusion of Indian bonds in JPMorgan’s emerging-market index is expected to attract foreign investments, and help bolster the Indian currency, according to market watchers.

JPM Government Bond Index-EM Global diversified Index has assets under management of about $200 billion. A 10 per cent weightage on the index will mean that about $20 billion dollar will flow into these bonds.

“India’s inclusion in the global bond index is a pivotal step towards international recognition and access to vital capital for growth. This move promises increased demand for the Indian rupee, potentially buffering against depreciation. Lower borrowing costs can fuel essential infrastructure projects, while heightened liquidity may foster more efficient trading conditions,” said Suresh Swamy, partner, Price Waterhouse & Co.

Also read: Rupee rallies on JPMorgan’s move to include India in its index

This would also contribute to the roadmap for India’s growth of $5 trillion economy. However, the inclusion may also entail heightened vulnerability to global market fluctuations, as India becomes subject to shifts in sentiment, economic conditions, and policies in major economies, influencing bond prices and yields.

“Navigating these dynamics will be key to India’s success,” said Swamy.

The much-anticipated inclusion of India in JPMorgan GBI-EM index, which has been in the works for over 10 years now, will be effective from June 28, 2024, accounting for post-announcement operational lags.

Also read: The big deal about global bonds and India’s inclusion

India’s weight of 10 per cent will be staggered over 10 months, leading to passive inflows of $22 billion. The actual flows though may be higher, contingent on market dynamics and active flows.

Reliance Securities

A big long-term positive in the domestic market after the news that the JPMorgan Chase & Co. will add Indian government bonds to its benchmark emerging-market index, a keenly awaited event that could drive billions of foreign inflows to the nation’s debt market, starting from June 28 2024.

Nilesh Shah, Managing Director, Kotak Mahindra AMC

India’s inclusion in bond index is a step in the right direction. With exclusion of Russia and troubles in China, the options for global debt investors have narrowed down. Hopefully rating agencies will respect investors view point and give up on their moody and poor standards. This inclusion will deepen bond market in India.

HSBC Holdings Plc

The inclusion may also prompt flows of as much as $30 billion. We expect this as a positive for PSU Banks.


Foreign bank DBS said there was also high demand amongst benchmark investors for India’s inclusion in the index and that a final 10% weightage in the JPM index could lead to inflows of $25 billion to $30 billion into India after the inclusion is complete.

Rakeshh Mehta chairman of Mehta Equities Ltd

India’s inclusion in JP Morgan emerging markets bond index is great news which would give a booster access to global investors to participate in the world’s fastest-growing large economy that would offer them the highest alpha returns in the emerging region.

I believe it is after waiting for 10 odd years India has finally been included in the JP Morgan EM Bond Index today effective 28th June 2024. The credit goes to the Govt of India, regulator as well as various government organisations who made this possible in the current scenario.

The news has come at the right time when the market is under pressure and hereafter the possibility of larger FPI flows could be seen ahead of this inclusion. The Rupee would also benefit from this news. We continue to remain optimistic on a great Indian long term story. Equity markets would take this as a welcome note at the right time.

Madhavi Arora, Economist at Emkay Global Financial

The much-anticipated inclusion of India in JP Morgan GBI-EM index will be effective from 28th Jun’24, accounting for post-announcement operational lags. India’s weight of 10% will be staggered over 10 months, leading to passive inflows of $22bn ($26bn accounting for addition in other smaller indices).

The actual flows though may be higher, contingent on market dynamics and active flows. Structurally, this will lower India’s risk premia/cost of funding, enhance the liquidity and ownership base of G-Secs and help India finance its fiscal and CAD.

This does not immediately pave way for inclusion in FTSE and Bloomberg indexes, which have more stringent conditions (FPI taxation/Euroclear). But it could have a demonstration effect in the medium term as the lower risk premia could trigger positive externalities.

Near-term, we expect bond yields and INR to reverse gains after the initial euphoria, tracking global markets. However, the trend will again reverse in favour of bonds by end-Mar’24, with 10-yr yield coming off well below 7%.

For 2H FY24, we see USD-INR ranging 82.25-84.25, with tactical RBI intervention keeping it middle of EM Asia pack.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services

JP Morgan’s inclusion of India in its Emerging Market Bond Index will reduce bond yields and the consequent decline in the cost of borrowing will boost the bottom line of companies.


The inclusion could lead to passive inflows as index tracking funds increase their holdings in Indian bonds. According to estimates this could be anywhere between $25-30 billion in the first year. As of now, 23 bonds worth a notional value of $330 billion are eligible to be added in the index in a staggered way over 10 months – 10% of this (maximum weightage) could therefore lead to close to $30 billion passive inflows.

This is a structural change that could rerate Indian bonds and could have positive medium-term implications for bonds, the rupee, and the balance of payment situation. Even with the same supply of bonds, bond yields could trade in a lower range. This could also have spillover effects to cost of borrowing for Indian corporates as well (for instance for the ECB market).

While there appears to be some short-term decoupling with the US yields and oil movements (the recent increase), the bond yield could continue to respond to global movement once the immediate knee-jerk reaction plays out. Moreover, over the medium term, index inclusion does not imply a permanent insulation from global and domestic vulnerabilities. Moreover, the rise in external debt could also bring about another set of macro stability issues.

The announcement is likely to cause an immediate rally in the domestic bond market today, with the possibility of the 10Y benchmark moving towards 7.05% (closed at 7.15% yesterday and opened at 7.088% today). The USD/INR pair could also see some relief and might move towards 82.80 levels, after closing at 83.09 yesterday. We expect the pair to trade in the range of 82.70-83.00 today.

Ajay Seth, Secretary, DEA, Ministry of Finance

It is a welcome development showing confidence in Indian Economy.

Anantha Nageswaran, Chief Economic Advisor

We welcome this development. JPMorgan has made this decision on their own. It attests to the confidence that financial market participants and financial markets, in general, have on India’s potential and growth prospects and its macroeconomic and fiscal policies. Just as long-term equity investors have been amply rewarded by investing in Indian markets, so will benefit long-term investors in Indian government bonds.

Rajeev Radhakrishnan, CIO– Fixed Income, SBI Mutual Fund
  • 23 Indian FAR Securities (excluded less than $1 billion outstanding and maturity before Dec 2026) are eligible with combined notional value of $337 billion • As of Sep 21, 2023 2.5% of o/s FAR securities was held by FPIs USD 8.5 bn
  • India’s govt bond market size was $1.3 trillion as on Sep 8, 2023 and overall FPI holding was $8.5 billion only
  • Weight would be 10% which is highest in the Index (China, Indonesia, Mexico, Malaysia and Brazil all at 10%)
  • Index yields as of today goes up by 33 bps for JP EM - Global Index, duration by 0.19 yrs
  • 73% of benchmarked investors agreed to inclusion vs over 50% last year
Axis Mutual Fund

The news is a long-standing win for India’s policymakers and markets have rightfully cheered the announcement. Despite the negativity around global bond yields, we believe our markets will remain quite resilient after this inclusion. In the medium term, our target for the benchmark 10-year bond yields at 6.75% remains on track.

For the medium term, once this entire noise around Fed hikes and global yields stabilizes, we believe peak market rates are behind us and market yields could gradually soften. From a demand perspective, markets could see incremental buying from active foreign funds. That would probably be less than $5 billion before the index inclusion.