India’s Corporate Bond Market Could Grow to $1.3 Trillion by 2030: Niti Aayog

India’s premier government policy think tank Niti Aayog has called for long-term sustained reforms in the country’s bond market so that it could realise its potential to grow to $1.3 trillion by 2030.

The size of India’s bond market in FY 2024-25 was around $597 billion.

In a new report on 'Deepening the Corporate Bond Market in India' released by Niti Aayog CEO BVR Subrahmanyam in New Delhi on Thursday evening, the think tank suggests a three-phased approach (short, medium and long-term) to bring India’s bond market on par with those of other developed economies. The report has been put together by a team headed by Niti Aayog Programme Director Professor Pravakar Sahoo.

"India is aiming to be the world’s third-largest economy in the coming years (by 2047). And that growth has to be driven by investments. Fundamentally, those investments have to be funded either through equity or debt," Subrahmanyam said at the launch of the report, explaining the strategic significance of having a well-developed bond market.

The CEO noted that while India’s equity markets were one of the best in the world, having one of the best GDP to Stock Market Cap ratios of all countries, the majority of the bond markets were mediated through banks with minimal participation from MSMEs, retail investors, and foreign portfolio investors.

The report highlights that economies such as the US and China collectively account for over half of the global corporate bond market. In comparison, India’s share in the global pie has remained less than 1%, it said.

In terms of corporate bond issuances by non-financial sector entities, India also ranks well below countries such as US, China and even Brazil, the report said.

The report identifies the corporate bond markets as a "Vital Pillar" of long-term growth and critical to achieve the goal to become a $30 trillion economy, or a developed nation, by 2047, a goal set by Prime Minister Narendra Modi.

"A deep and vibrant bond market can provide long-term, stable and cost-effective capital to sectors such as infrastructure, MSMEs and emerging technologies, all of which are central to sustaining India’s economic transformation," the report said.

A well-functioning bond market is essential not only for mobilising long-term capital at scale but also for reducing dependence on bank credit, supporting infrastructure growth and fostering financial resilience, it noted.

NITI Aayog said that a well-developed corporate bond market would channel institutional and household savings into productive sectors, support efficient price discovery and also facilitate the development of risk management instruments.

India Lays a 'Strong Foundation' in Last 10 Years

The report credits policy measures by the Indian regulatory authorities in the last 10 years for laying a "strong foundation" to build upon in developing an accessible and technologically-driven bond market ecosystem.

These include Securities and Exchange Board of India’s (SEBI) Request for Quote (RFQ) platform, facilitated retail access through online bond platforms, strengthened governance standards for credit rating agencies and debenture trustees as well as simplified issuance norms.

Meanwhile, the Reserve Bank of India (RBI) has bolstered its settlement architecture, introduced tri-party repos and credit default swaps, and supported the development of repo and clearing mechanisms, NITI Aayog said.

However, at the same time, the government think tank said there were key "challenges" keeping the Indian bond market from realising its full potential, which include regulatory overlaps between multiple authorities, extensive disclosure requirements and procedural delays discouraging broader participation.

The report said that the secondary market remained shallow with limited liquidity and price transparency, while institutional investors such as insurance companies and pension funds remained constrained by investment norms that limit exposure to lower-rated securities.

In terms of "strategic recommendations", the report backed short-term efforts focussed on "streamlining regulations and procedures, enhancing coordination among regulators, and improving legal clarity." At the same time, it also stressed the importance of further simplification of market access and the strengthening of market infrastructure—through digital access, reliable credit ratings and robust trading platforms.

In the medium-to-long term, Niti Aayog called for "deeper structural reforms and institutional capacity-building".

"Regulatory frameworks will evolve to support a unified architecture, more effective resolution mechanisms, and a conducive environment for innovation. Market infrastructure will be upgraded for scale and resilience, enabling digital transformation across issuance, trading, and settlement," the report said.

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India’s Corporate Bond Market Could Grow to $1.3 Trillion by 2030: NITI Aayog

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