This move could also have an impact on the rupee, which may depreciate further.
The Indian bonds and currency markets may face challenges as JP Morgan Chase & Co is reportedly evaluating a reduction in the weight of the largest bond issuers in its prominent emerging-market index, which includes China and India.
Indian bonds, known as Government Securities (G-Secs), were incorporated into JPMorgan’s Global Bond Index – Emerging Markets (GBI-EM) last year, effective June 28, 2024.
Market experts warn that if India’s weighting in this index is decreased from 10 percent to 9 percent, it could lead to selling pressure on G-Secs, resulting in an increase in yields.
This change could also negatively affect the rupee, causing it to depreciate further.
K. Arvind, Head of Treasury at Tamilnad Mercantile Bank, stated, “There was a lot of excitement about the inclusion of our G-Secs in both the JPMorgan and Bloomberg Indexes. However, if JPMorgan decides to reduce India’s index weight, it would be detrimental to our markets. I anticipate a spike in our bond yields, which will also have repercussions for the Rupee.”
Tariff Tensions
Market observers noted that the U.S. appears to be intensifying another front in its tariff disputes with India and China through potential adjustments of country risk weights in JPMorgan’s GBI-EM.
Bloomberg reported that JPMorgan Chase & Co plans to decrease the weight of the largest bond issuers in its flagship emerging-market index, reallocating investor funds away from China and India towards smaller economies.
The Wall Street firm intends to gradually reduce the issuer cap on its GBI-EM Global Diversified Index in the first half of 2026, as per a notice sent to clients seen by Bloomberg.
The cap will decrease from 10 percent to 9 percent, with a phased implementation over several months, according to documents dated Friday.
Edelweiss Mutual Fund indicated in a September 2023 report that a 10 percent weighting for G-Secs could attract $21 billion (approximately ₹1.7 lakh crore) of investments in bonds by March 31, 2025, assuming investors possess zero weighting currently and aim to be index neutral.
Published on September 15, 2025
