India’s weight in the MSCI Emerging Markets (EM) Index has dropped to its lowest level in nearly two years, owing to the weak performance of domestic equities.
At the end of August, India’s share was 16.21%—the lowest since November 2023. In July 2024, it was as high as 20%, but has since declined significantly. At that point, India was only 4.5% behind China, but now it has slipped to third place after Taiwan.
The MSCI EM Investable Markets Index shows a similar trend. A year ago, India’s weight stood at 22.3%, which fell to 17.47% by August 2025. While the MSCI EM Index has risen 16% over the past 12 months, India’s Nifty 50 has slipped 0.2%, weakening its position.
Analysts note that India’s representation in the index has actually grown—from 146 companies in July 2024 to 160 now. However, China’s market capitalization expanded sharply due to a strong rally, while India’s leading stocks underperformed. Experts still expect India’s representation to rise further to about 170 companies over the next year.
Yet, unless China sees a significant decline, India may take longer to regain a 20% share in the MSCI EM Index. This matters because the index is tracked by global funds managing over $700 billion in assets.
Morgan Stanley has observed that India’s weight in global EM funds is currently at its lowest level. Weaker earnings, slower growth, and U.S. tariffs have led to India’s downgrade relative to long-term bonds, other EM markets, and gold.