NEW DELHI — India’s corporate bond market has grown steadily over the past decade but remains underdeveloped compared with global peers, leaving significant room for expansion, according to a report released Thursday.
CareEdge Ratings said India’s corporate bond market grew from $360 billion in 2016 to $645 billion in 2025. However, the country’s corporate debt-to-GDP ratio has remained largely stable at 16% to 17%, well below levels seen in China, Malaysia and South Korea.
The report said deeper debt capital markets will be essential for financing India’s long-term growth ambitions, particularly as global volatility, sovereign debt stress and risk repricing reshape capital flows.
Despite steady growth in issuances over the past decade, India’s corporate bond market continues to lag global peers in size, liquidity and investor diversity, CareEdge said. The market remains at about 16% of GDP, underscoring the need for policy measures to 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 of CareEdge.
Pandya said India needs to build greater awareness, relax investment mandates for retirement funds and insurance companies, and encourage more foreign participation to expand the investor base in the debt capital market.
He added that improving secondary market liquidity through market-making mechanisms, bond derivatives and bond ETFs remains a key priority for market development.
India’s outstanding corporate bonds have grown at an 11.4% compound annual growth rate to nearly Rs 59 lakh crore, the report said. However, issuances remain concentrated, with the banking, financial services and insurance sector accounting for more than 60% of the market. AAA- and AA-rated papers account for more than 85% of issuances.
The report called for targeted policy steps, including relaxing investment mandates for retirement and insurance funds, rationalizing the tax structure on debt products, encouraging foreign participation and improving secondary market liquidity.
