What Inclusion of India to the JPMorgan Bond Index Means

Global funds are investing in India's $1 trillion sovereign bond market ahead of the country's inclusion in global debt indices. JPMorgan Chase & Co. (JPM) announced late last year that it would include Indian government debt in its benchmark emerging-market index from June, a milestone for Asia's third-largest (after China and Japan) economy.

It gave international investors a compelling reason to invest money into rupee-denominated Indian government debt, which offers some of the highest yields in emerging markets. The move also means JPMorgan will be able to claim greater diversification after excluding Russia and amid lingering concerns about geopolitical tensions between the U.S. and China.

Having announced India's inclusion in the EM index in September last year, JPMorgan said 23 bonds with a total face value of about USD330 billion could be included in the benchmark. The inclusion has been gradually accumulated within the 10 ongoing months with a weighting of about 1% per month, up to a maximum weighting of 10%. Following JPMorgan, Bloomberg Index Services announced earlier this year that it will also add Indian bonds in Fully Accessible Route, or FAR, to its local-currency EM index from January 2025. India is also on the shortlist for inclusion in the FTSE Russell EM debt index from March 2021 (Bloomberg LP is the parent company of Bloomberg Index Services, which manages indexes that compete with those of other index providers).