JPMorgan Chase & Co., a global leader in financial services, announced that India’s inclusion in its prestigious emerging market debt index is on schedule to commence in June. This move is anticipated to attract significant foreign inflows into Indian debt markets, potentially reaching $25 billion.
According to Gloria Kim, managing director of JPMorgan’s global head of index research, client feedback has been overwhelmingly positive. A majority of index clients have already established trading capabilities in the Indian government bond market (IGB market). This positive sentiment stems from recent market reforms undertaken by Indian authorities, making it easier for foreign portfolio investors to participate. These reforms include extending trade-matching windows and simplifying the onboarding process.
However, Kim acknowledges that challenges remain, particularly in operational readiness and flexibility among some counterparties and custodians. Despite these teething issues, the firm remains optimistic about the long-term potential of India’s inclusion in the index.
Indian sovereign bonds have already witnessed substantial inflows of approximately $8 billion into Fully Accessible Route (FAR) securities since the JPMorgan announcement. The Bloomberg gauge of these bonds has outperformed its peers this year. The anticipated index inclusion is expected to further boost Indian assets, including corporate bonds and foreign exchange reserves.
JPMorgan’s decision to include India in its emerging market debt index is a testament to the country’s growing economic importance and the ongoing reforms aimed at attracting foreign capital. As India continues to improve its market accessibility and tradability, it is poised to become a major destination for global investors seeking emerging market opportunities.
