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Fitch Ratings has said the inclusion of certain Indian sovereign bonds in key emerging-market bond indices managed by JP Morgan will support a diversification of the investor base for Indian government securities. This inclusion could also help to lower funding costs slightly and support further development of domestic capital markets, but direct positive effects on India's credit profile will be marginal in the near term.

It mentioned ‘Inclusion in the indexes could facilitate about $24 billion in passive inflows between June 2024 and March 2025. Flows could be greater if other indexes also move to include Indian government securities.’

Further, it stated ‘India's high government debt and interest/revenue ratios are weaknesses in its credit profile, and developments that help to lower funding costs can have a significant influence on the sovereign's creditworthiness. However, we expect the positive effect on the sovereign rating of India's inclusion in the JP Morgan Global Bond Index-Emerging Markets (GBI-EM) to be small, especially in the near term, as its impact on fiscal credit metrics is unlikely to be significant.’