Inclusion in JPMorgan Bond Index May Attract $23 Billion Inflows,” Says Indian Finance Minister

Finance Minister Nirmala Sitharaman has revealed that India’s inclusion in JPMorgan‘s emerging market debt index could potentially bring $23 billion of foreign investment into the country. JPMorgan Chase & Co. recently announced plans to add Indian government bonds to its benchmark emerging-market index, starting in June 2024. This move is expected to attract significant foreign investment into India’s domestic debt market.

The inclusion process will span ten months, with incremental increases in India’s index weighting, ultimately reaching a maximum allocation of 10 percent. JPMorgan estimates that 23 Indian government bonds with a combined notional value of $330 billion are eligible for inclusion. As a result, a 10 percent weightage on the index could lead to around $20 billion flowing into these bonds.

Experts believe that India’s inclusion in the bond index will reduce bond yields, lowering the cost of borrowing for the country. This development is seen as a positive step toward achieving India’s goal of becoming a $5 trillion economy. However, it also exposes India to global market fluctuations, making it susceptible to shifts in sentiment, economic conditions, and policies in major economies.

Re-reported from the article originally published in The Business Today