The inclusion of Indian government bonds in JPMorgan's emerging market bond index is expected to have a significant impact on the bond market and debt mutual funds. The inclusion will attract global passive debt flows into India, potentially leading to better demand-supply balance and lower yields for Indian government bonds. This, coupled with expectations of large foreign institutional investor inflows, could result in increased attractiveness of debt funds. However, the future rate hike trajectory is uncertain, as it depends on economic conditions and data-driven decisions by the US Federal Reserve.