Economic Impact and Historical Inclusion of Indian Government Bonds in JP Morgan’s Index

JP Morgan’s Emerging Market Bond Index now includes Indian government bonds (IGBs), a key financial market breakthrough for India. India became the 25th market to join this prestigious index since June 2005 on June 28, 2024.

Large Financial Inflows

Government bonds will bring in huge funds for India. In the next 10 months, economists predict $20 billion to $25 billion in global investments in Indian bonds. Since JP Morgan’s September announcement, $10 billion has entered qualified bonds, indicating investor interest.

Structured Inclusion Process

By March 31, 2025, IGBs will weigh 10% from 1%. This tiered method stabilizes bond markets and investment. Bonds must have no less than ₹1 billion outstanding and 2.5 years of residual maturity under the Reserve Bank of India’s ‘Fully Accessible Route’ (FAR). High-index bonds like the 7.18 GS 2033, 7.30 GS 2053, and 7.18 GS 2037 are expected to be popular.

Forecasts and market responses

Market attitude has improved, with major brokerages reassessing RIL. Jefferies predicts a 17% increase in RIL price to ₹3,580 from the previous closing. Morgan Stanley rates the stock ‘Overweight’ and sets a target price of ₹3,046, expecting benefits from tariff hikes and additional energy cash flows by year-end.

Impact on Other Emerging Markets

Thailand, Poland, and the Czech Republic will lose weight in the JP Morgan Emerging Market Bond Index after India’s entrance. By March, Asia’s index weight will climb to 47.6% while EMEA’s emerging markets would fall from 32% to 26.2%.

Increased Foreign Ownership

JP Morgan index inclusion should boost foreign hold of Indian bonds from 2.5% to 4.4%. Foreign participation should increase market liquidity and lower Indian government borrowing rates. Consistent foreign funding may cut bond yields and promote financial stability.

Broader Market Impact

JP Morgan GBI-EM index includes Indian government bonds, showing India’s financial strength. Demand for Indian government securities may rise in FY25, decreasing yields. Despite the upbeat outlook, experts expect markets to experience volatility as they adjust.


JP Morgan’s Emerging Market Bond Index now includes Indian government bonds, demonstrating global investors’ confidence in India’s financial markets. Market liquidity, foreign investment, and economic growth will increase with this method. As global financial indices include India, its bond market would stabilize and acquire relevance.

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