Indian government bonds will soon start to be phased into the flagship EM local currency debt index. Mark Evans outlines what this means for the index, the potential impact on Indian debt valuations, and key considerations for active investors over different time horizons. After a decade-long wait, Indian government bonds will soon begin a phased inclusion into the main index that is tracked by investors in emerging market (EM) local currency debt – the JP Morgan Government Bond Index – Emerging Markets Global Diversified (JPM GBI-EM GD). Entering the index with a 1% weight at the end of June and then rising by the same amount each month, Indian debt should reach its maximum-permitted 10% index weight by next April. To allow this, other markets will see their benchmark weights fall, with Thailand, South Africa and Poland set to be impacted the most.

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