India to be Added to JPMorgan's Emerging Market Government Bond Index

India is set to join JPMorgan's emerging market government bond index in June 2024, opening up opportunities for increased foreign investment in the country. The inclusion will involve 23 Indian government bonds with a total value of $330 billion, and over the course of 10 months, India is expected to achieve a maximum weighting of 10%.

The move is anticipated to bring in at least $21 billion in inflows from foreign investors. If other index providers follow suit, the impact could be even greater. Jennifer Taylor, the head of emerging market debt at State Street Global Advisors, highlights that this inclusion will likely lead to lower yields for Indian government bonds (IGBs) and provide support for the rupee.

The Reserve Bank of India has been working towards this inclusion since 2019, actively engaging with index providers. This strategic approach is now paying off as India prepares to join the prestigious index.

In related news, the iShares JPMorgan USD emerging market bond ETF (EMB) has experienced a slight decline of 1% this year. On the other hand, the S&P BSE Sensex index (IN:1) closed Friday with a minimal loss and remains just 2% below its record high.

Also read: 'Emerging markets have a China problem.' This strategist favors India, which just hit a record.