India increases exposure to US securities by $31 billion

India has increased its exposure to US government securities by USD 31 billion in the first five months of 2015, thereby taking the total holdings to USD 114 billion. India has traditionally had limited exposure to US government securities when compared to China. This increase in holding also makes it the highest ever holding by India in more than a year.

China and Japan are the largest holders of US government securities with holdings of USD 1.27 trillion and USD 1.21 trillion respectively. Ever since the NDA-led government came to power in May 2014, India has been steadily increasing its exposure to the US G-Sec. The US G-Sec is seen as one of the safest instruments in the world as no other investment carries as strong a guarantee that interest and principal will be paid on time.

This growing change in India increasing its exposure to US G-Sec also shows India trying to reach the level of China and Japan in its holdings though it has some distance to catch up with both countries to reach their level of holdings. This is a slow but steady change emerging in India’s existing portfolio allocation.

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