Indian Bonds Surge as Foreign Investors Bet Big on Index Inclusion

Foreign investors are flocking to Indian government bonds, with inflows reaching ₹62,431 crore ($7.5 billion) since their inclusion in the JP Morgan emerging market index. The phased inclusion, which began in June 2024, has already attracted significant attention, with India's weight in the index set to reach 10% by March 2025. This influx of foreign capital is expected to lower borrowing costs for the government and boost the rupee. However, some analysts, including Morgan Stanley, caution that total inflows may fall short of initial estimates due to global economic uncertainties and active fund management strategies.

 

Sources: Economic Survey 2025, Moneycontrol, Business Standard, Morgan Stanley Research