On Friday, India officially became part of JP Morgan's Government Bond Index-Emerging Markets (GBI-EM). This move follows an announcement made in September, setting the stage for significant financial inflows into the world's fifth-largest economy.
Starting today, Indian Government Bonds (IGBs) will begin to be included in the index, with a one-per-cent weight being transferred initially. This weight will increase by one percentage point each month until it reaches a cap of 10 per cent by March 31, 2025. As a result, India will join the ranks of China, Indonesia, and Mexico, each with a maximum cap of 10 per cent in the JP Morgan Global Bond Index - Emerging Market Global Diversified Index.
Foreign investors have already directed around $10 billion into securities eligible for the index since the announcement. Goldman Sachs projects at least $30 billion more in inflows as India's index weighting rises to 10 per cent. This steady increase is likely to keep Indian bond prices strong.
