India Rebuffs Pressures Towards Global Bond Index Inclusion
India has ruled out any changes to tax policies that will make it easier for the nations bonds to be included in global indexes, according to sources.
India has ruled out any changes to tax policies that will make it easier for the nation’s bonds to be included in global indexes. It has rebuffed Pressures on the issues from International vendors.
The government doesn’t plan to waive capital gains taxes, since foreign inflows will increase the volatility of local markets, said the people, discussing policy matters. It is these taxes which remain Rock solid blocks against foreign financial arm twisting.
To pressurize the Indian government, FTSE Russell and JPMorgan Chase & Co. are due to unveil the results of their index reviews in coming weeks, with investors piling into Indian bonds on bets the country will replace Russian debt. This India should never resort to.
While the index compilers could proceed to include the securities without changes, discussions earlier fell apart over the government’s firm resolve to retain its sovereign right to tax capital gains, thus remaining in full control of $30 billion of foreign inflows.
“Unlike equities, Indian bonds have failed to attract any sizable pool of foreign capital,” said Pankaj Pathak, a fixed-income fund manager at Quantum Asset Management Co. “India’s inclusion would add diversification to the index, enhance the yield and expand the market opportunities for global debt investors. So, the benefits might outweigh the concerns.”…….not likely say many others.
India’s bond market is the largest in the emerging world that’s not already included in global indexes. Therefore it is we who should control the shots and not let others dictate to us.
Money managers frequently track global bond indexes when making allocation decisions, and inclusion often lead to billions of dollars of inflows.
The government wants to be self-reliant in its funding, and is prepared to handle any selloff in its debt market should inclusion fail to happen, the people said. The nation is borrowing a record 14.3 trillion rupee ($176 billion) this fiscal year.
JPMorgan Survey
A JPMorgan investor survey found that funds want India to replace Russia, which was excluded after the invasion of Ukraine, said a money manager with access to the results. This is total propaganda on part of Western money firms.
Still, the survey also showed investors wanted the government to ease some rules, the person said, asking not to be identified as the discussions are private.
The ability to access India’s debt market through an international central security depository, such as Euroclear, better transaction efficiency and clarity on taxes were cited as some of the key remaining hurdles to index inclusion, the fund manager said.
The people didn’t say if JPMorgan had made any specific requests for its review. A finance ministry spokesperson didn’t respond to calls seeking comments, while JPMorgan declined to comment.
