$25 BN FUNDS INFLOW EXPECTED India debuts in EM bond index

Entry into JP Morgan index to be over a 10-month period

- PIYUSH SHUKLA

INA DEVELOPMENT that is likely to prompt foreign inflows into the country and deepen the bond market, Wall Street major JPMorgan announced on Friday that Indian bonds will be included in its emerging market debt index.

The move is expected to pave the way for inflows of around $25 billion. The inclusion will occur without any tax incentives for overseas investors a major point of contention between the Indian government and index providers.

India's government bonds (IGB) or government securities (G-Sec) will enter JPMorgan's Global Bond Index-Emerging Markets (GBI-EM) global index suite, which currently manages around $236 billion in global funds.

The entry will take place over a 10-month period, spanning from June 28 to March 31, 2025, indicating a 1% increment in its index weight each month. JPMorgan said, "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 GBIEM Global index"

THE NIFTY PSU index rose by 3.51% on Friday in an otherwise lacklustre day for the stock market. The 10-year government bond yield closed up by 3 basis points at 7.19%.

However, it fell to 7.09% during the day. The rupee gained 16 paise, or 0.19%, against the dollar, closing at ₹82.94.

Lakshmi Iyer, CEO investment & strategy at Kotak Alternate Asset Management, said, "It's a landmark announcement with a more enduring impact for India. As much as $23 billion could flow in, given the 10% weight starting in June 2024 and continuing until March 2025.