India’s corporate bond market has seen steady growth, with room for further expansion, according to a report. The market has increased from $360 billion in 2016 to $645 billion in 2025, but the corporate debt-to-GDP ratio has stayed around 16-17%. Despite this growth, India’s market still lags behind countries like China, Malaysia, and South Korea, indicating potential for further development.
Amid global economic uncertainties, the report emphasizes the importance of strengthening India’s debt capital markets. Despite a decade of growth in issuances, India’s corporate bond market remains smaller and less liquid compared to global counterparts. It currently stands at about 16% of GDP, highlighting the need for policy interventions to deepen the market and attract a more diverse investor base beyond traditional sources.
Mehul Pandya, MD & Group CEO of CareEdge, stressed the necessity of developing deeper debt markets to support India’s long-term economic goals. To attract a broader range of investors to the Indian debt capital market, measures such as increasing awareness, relaxing investment regulations for retirement and insurance funds, and boosting foreign participation are recommended. Additionally, enhancing secondary market liquidity through various mechanisms like market-making, bond derivatives, and bond ETFs is crucial for market growth.
India’s outstanding corporate bonds have shown consistent growth, reaching nearly Rs. 59 lakh crore with an 11.4% CAGR. However, the market remains concentrated, with the BFSI sector dominating over 60% of the market and AAA and AA-rated papers holding more than 85% share. The report suggests targeted policy actions such as easing investment mandates, tax reforms on debt products, promoting foreign investments, and enhancing secondary market liquidity to further develop the market.
