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India’s corporate bond market needs to expand nearly seven times from its current size if the country is to meet its long-term financing needs and reduce its heavy dependence on bank-led lending, according to a latest report by NITI Aayog.
In countries such as the United States, corporate bond markets are larger than equity markets, a structure commonly seen across advanced economies. These markets offer diversified funding sources and deeper investor participation, something India is still lacking.
At present, India’s corporate bond market is estimated to be around $650 billion, which is significantly smaller when compared to global peers. For instance, the UK’s bond market is close to $4 trillion, while the US and China also have massive bond markets with broad and active participation. This stark contrast underlines the scale at which India’s bond market needs to grow.
The report points out that while India’s equity markets are globally competitive, the corporate bond market is only about one-seventh of the equity market’s size. This imbalance suggests that India’s financial markets have not evolved evenly.
More importantly, only about one-sixth of total corporate debt in India is currently raised through bonds, with the rest largely coming from banks. This makes corporate bonds a key area of focus for policymakers.
Another challenge highlighted is the slow pace of bond issuance in India. The issuance process typically takes between 20 and 60 days, compared to just one to five days in markets such as the US and the UK.
NITI Aayog also stresses the need for better regulatory coordination to support bond market development. Improving market infrastructure and encouraging broader participation from issuers are essential steps to deepen the market.
The report further calls for the introduction of new and diverse bond instruments. These include green bonds, energy transition bonds, rural development bonds and securities focused on micro, small and medium enterprises.
Technology-driven platforms are another area of focus. While several online bond platforms already exist, their scale and impact remain limited. The report suggests that stronger digital infrastructure could help replicate the success seen in equity markets and drive greater participation in bonds.
Overall, NITI Aayog’s assessment makes it clear that developing a deep, liquid and diversified corporate bond market is critical for India’s long-term economic growth and financial stability.
Also Read | NITI Aayog unveils roadmap to deepen India's corporate bond market
In countries such as the United States, corporate bond markets are larger than equity markets, a structure commonly seen across advanced economies. These markets offer diversified funding sources and deeper investor participation, something India is still lacking.
At present, India’s corporate bond market is estimated to be around $650 billion, which is significantly smaller when compared to global peers. For instance, the UK’s bond market is close to $4 trillion, while the US and China also have massive bond markets with broad and active participation. This stark contrast underlines the scale at which India’s bond market needs to grow.
The report points out that while India’s equity markets are globally competitive, the corporate bond market is only about one-seventh of the equity market’s size. This imbalance suggests that India’s financial markets have not evolved evenly.
More importantly, only about one-sixth of total corporate debt in India is currently raised through bonds, with the rest largely coming from banks. This makes corporate bonds a key area of focus for policymakers.
Another challenge highlighted is the slow pace of bond issuance in India. The issuance process typically takes between 20 and 60 days, compared to just one to five days in markets such as the US and the UK.
NITI Aayog also stresses the need for better regulatory coordination to support bond market development. Improving market infrastructure and encouraging broader participation from issuers are essential steps to deepen the market.
The report further calls for the introduction of new and diverse bond instruments. These include green bonds, energy transition bonds, rural development bonds and securities focused on micro, small and medium enterprises.
Technology-driven platforms are another area of focus. While several online bond platforms already exist, their scale and impact remain limited. The report suggests that stronger digital infrastructure could help replicate the success seen in equity markets and drive greater participation in bonds.
Overall, NITI Aayog’s assessment makes it clear that developing a deep, liquid and diversified corporate bond market is critical for India’s long-term economic growth and financial stability.
Also Read | NITI Aayog unveils roadmap to deepen India's corporate bond market
