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.
