India's corporate bond market grows to $645 billion: Report
New Delhi, May 28
India's corporate bond market has grown steadily but still offers significant room to expand, which will be crucial to adequately finance the country's long-term growth ambitions, a report said on Thursday.
The report from CareEdge Rating said India's corporate bond market has grown from $360 billion in 2016 to $645 billion in 2025, although the corporate debt-to-GDP ratio remained stable at 16-17 per cent. It significantly lags peers such as China, Malaysia and South Korea, signifying headroom for market deepening.
Amid rising global volatility, sovereign debt stress and risk repricing reshape capital flows worldwide, strengthening India's debt capital markets is an imperative, the report noted.
India's corporate bond market continues to lag global peers in size, liquidity and investor diversity, despite steady growth in issuances over the past decade. India's corporate bond market remains stuck at nearly 16 per cent of GDP, far below peers, the firm said, highlighting the urgent need for policy measures to deepen the market and broaden participation beyond banks and highly rated issuers.
"India's aspiration of becoming a $30 trillion economy by 2047 would require deeper and more developed debt markets to finance long-term growth," said Mehul Pandya, MD & Group CEO, CareEdge.
To encourage a wider investor base in the Indian debt capital market, there is a need to build greater awareness, relax investment mandates for retirement funds and insurance companies, and encourage higher foreign participation, Pandya added.
Additionally, improving secondary market liquidity through market-making mechanisms, bond derivatives and bond ETFs remains a key priority for market development, he further said.
India's outstanding corporate bonds have grown steadily at an 11.4 per cent CAGR to reach nearly Rs. 59 lakh crore. However, issuances continue to remain concentrated, with the BFSI sector accounting for over 60 per cent of the market and AAA and AA-rated papers commanding more than 85 per cent share.
The report urged targeted policy steps such as relaxing investment mandates for retirement and insurance funds, rationalising the tax structure on debt products, encouraging foreign participation, improving secondary‑market liquidity, etc.
— IANS
Reader Comments
Good to see growth but still a long way to go. The report rightly points out that 85% of bonds are AAA/AA rated - that's not healthy. We need more diversity in credit quality and issuers. Otherwise it's just banks lending to each other! 🤔
As someone who works in finance, I can tell you that liquidity is a major issue here. Try trading a corporate bond in India compared to the US - it's like night and day. Market-making mechanisms and bond ETFs are exactly what we need.
Good analysis but the report misses one key point - retail investors are still scared of corporate bonds after the IL&FS and DHFL defaults. Need better credit rating transparency and investor protection before we can really deepen the market.
Interesting numbers. The CAGR of 11.4% is decent but the concentration in BFSI is worrying. We need infrastructure and manufacturing companies to tap the bond market more. That $30 trillion goal by 2047 won't happen without diverse funding sources.
As a CA student, I find this topic fascinating. The tax rationalisation suggestion is crucial - current TDS rules on bonds are a hassle for investors. Also, more foreign participation will bring better practices. Let's hope policymakers act on this! 👍
R We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.