India's Corporate Bond Market Expected to Surpass Rs 100 Trillion by 2030, Says NITI Aayog Report

India's corporate bond market could surpass Rs 100–120 trillion by 2030, contingent on significant structural reforms and capacity-building, a report suggests. Over the last ten years, the market has grown notably, with outstanding issuances increasing from Rs 17.5 trillion in FY2015 to Rs 53.6 trillion in FY2025, reflecting an annual growth rate of nearly 12%, according to a Niti Aayog report released on Thursday.

The report highlights that with sustained policy focus, technological advancements, and harmonised regulations, the corporate bond market can become a crucial component of India's financial system. This development would channel both domestic and international capital into productive sectors, supporting India's long-term growth towards Viksit Bharat 2047. Despite progress in debt market infrastructure and regulatory frameworks, India still lags behind global counterparts like South Korea and China.

Market Infrastructure and Regulatory Framework

Currently, the corporate bond market represents about 15–16% of GDP, which is an improvement but still below other nations. Strengthening this market requires ongoing reforms in infrastructure, risk management tools, investor diversification, and credit enhancement mechanisms. Deepening these reforms will not only boost private sector investment but also align financial development with India's strategic goals for inclusive and sustainable growth.

The report calls for deeper structural reforms and institutional capacity-building to expand the market. Regulatory frameworks need to evolve to support a unified architecture and effective resolution mechanisms. Market infrastructure should be upgraded for scale and resilience, enabling digital transformation across issuance, trading, and settlement processes.

Investor Participation and Technological Advancements

To broaden the issuer base, new asset classes should be promoted while institutionalising product innovation for sustainable investment options. Investor participation can be expanded through targeted incentives, greater integration of foreign investors, and improved transparency. Technological advancements will enhance data-driven decision-making and market intelligence, creating a more efficient bond market.

The recommendations are part of a comprehensive strategy to make India's corporate bond market globally competitive. Implemented in phases, these reforms aim to address short-term issues while building institutional depth for sustainable development. Initial efforts focus on streamlining regulations and procedures, enhancing coordination among regulators, and improving legal clarity.

Challenges and Impediments

The report identifies several impediments such as regulatory overlaps between authorities, extensive disclosure requirements, and procedural delays that discourage broader participation. The secondary market remains shallow with limited liquidity and price transparency. Institutional investors face constraints due to norms limiting exposure to lower-rated securities.

Weak debt recovery mechanisms, high transaction costs, and tax asymmetries further reduce investor appetite. These structural frictions collectively hinder the corporate bond market from reaching its full potential as a driver of capital formation and financial inclusion. Early measures aim to reduce friction by simplifying market access and fostering basic innovation in instruments.

Efforts will also target expanding investor outreach to build confidence across the ecosystem. By addressing these challenges through phased reforms, India aims to create a resilient corporate bond market that supports long-term economic growth.

With inputs from PTI