India's local bonds will be included in the Government Bond Index-Emerging Markets (GBI-EM) index. (file)
Welcoming JPMorgan's decision to include India in its widely-tracked emerging market debt index, the government said it shows confidence in the Indian economy, its potential and growth prospects, and its economic policies. Long-term investors in Indian government bonds will be amply rewarded, just as long-term equity investors in Indian markets have been, a top official said.
The move sets the stage for billions of dollars of inflows into the world's fifth-largest economy, news agency Reuters said.
India's local bonds will be included in the Government Bond Index-Emerging Markets (GBI-EM) index and all the index suite, including select bonds in an investment grade-only index.
"It is a welcome development showing confidence in Indian Economy," Ajay Seth, Secretary, Department of Economic Affairs, said.
JPMorgan said 23 Indian Government Bonds (IGBs) with a combined notional value of $330 billion are eligible.
"We welcome this development. JPMorgan has made this decision on their own. It attests to the confidence that financial market participants and financial markets, in general, have on India's potential and growth prospects and its macroeconomic and fiscal policies. Just as long-term equity investors have been amply rewarded by investing in Indian markets, so will long-term investors in Indian government bonds be," V Anantha Nageswaran, Chief Economic Adviser to the Government of India (CEA), said.
Inclusion will start on June 28, 2024, and extend over 10 months with 1% increments on its index weighting, as India is expected to reach the maximum weighting of 10%, JPMorgan said.
"The decision is the latest sign of India's growing appeal to international investors as the country's economic growth outstrips peers, its geopolitical influence grows and global companies including Apple Inc. look for alternatives to China," Bloomberg said.
"India's milestone is a stark contrast to many emerging-market peers, not least neighboring China, whose economic woes and struggling financial markets have become a source of frustration for global investors. In fact, those troubles have only burnished India's appeal," it added.