In a recent statement at the 5th SEBI-NISM Research Conference, Madhabi Puri Buch, Chairperson of SEBI, highlighted the anticipated surge in passive investments into India as government bonds join global indices. Buch said that establishing a benchmark and yielding curve for sovereign debt would instill confidence not only in government bonds but also in corporate debt markets.

JPMorgan Chase & Co’s announcement to include Indian government bonds in its benchmark emerging-market index, starting June 28, stands as a pivotal moment for India’s debt market. 

This move reflects the growing appeal of India to global investors, underscoring its position as one of the fastest-growing major economies on the global stage.

Furthermore, reports suggest that Indian government bonds could receive an additional boost with Bloomberg’s proposed inclusion in its indices, starting September 2024. 

These developments hold crucial implications, particularly as various global manufacturing giants consider India as part of their diversification strategy in a post-pandemic world order.

Buch also shed light on the robustness of India’s primary bond market, despite relatively lower liquidity in the secondary market. She highlighted the substantial corporate borrowing from bonds, reaching a peak of almost 70%, indicating strong market potential.

Comparing with India’s equity market, Buch projected that the total value of Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (INVITs), and municipal bonds could equal India’s GDP. This underscores substantial growth opportunities for the nation.

Additionally, Buch underlined SEBI’s role in ensuring governance, disclosures, and promoting innovation within the market ecosystem. She noted the significant contribution of retail investors to India’s equity markets through various investment channels such as mutual funds, insurance, and pension funds.