Deepening India's Corporate Bond Market: NITI Aayog's Roadmap to ₹120 Trillion by 2030
SDG 9: Industry, Innovation and Infrastructure | SDG 17: Partnerships for the Goals
NITI Aayog | Securities and Exchange Board of India (SEBI) | Reserve Bank of India (RBI)
The NITI Aayog report, Deepening the Corporate Bond Market in India, underscores the urgent need for structural reform to expand the corporate debt market, calling it a critical pillar for achieving the vision of Viksit Bharat 2047. The report projects that the market has the potential to exceed ₹100–120 trillion by 2030. Such expansion is essential because reliance on bank lending and equity will be insufficient to meet massive funding needs across infrastructure, MSMEs, and emerging technology sectors.
What are Corporate Bonds? Corporate bonds are debt instruments issued by corporations (companies) to raise capital directly from investors, rather than borrowing from banks. They represent a loan made by the investor to the company, usually for a fixed period (tenor) and with a promise to pay periodic interest (coupon). For a developing economy, a deep corporate bond market provides long-term, stable, and cost-effective financing for major projects like infrastructure, green initiatives, and long-tenure investments that traditional bank lending may not efficiently support.
Current State and Structural Deficits:
Size and Growth: As of FY2025, the market size is approximately ₹53.6 trillion (~16% of GDP), having grown at an annual rate of 12% over the last decade.
Retail Exclusion: Retail participation remains minimal due to the overwhelming dominance of private placements (98% of issuances), which are typically inaccessible to retail buyers.
Regulatory Friction: The market is hampered by regulatory overlaps among SEBI, RBI, and MCA, leading to compliance burdens, extensive disclosure requirements, and procedural delays.
Market Liquidity: The secondary market remains shallow, suffering from low liquidity and limited price transparency.
Reforms and Future Development Roadmap:
The report lays out a multi-phase, six-year roadmap with coordinated reforms:
Phase I (1–2 years): Focus on streamlining inter-agency regulations and disclosure norms, strengthening debenture trustee roles, and enhancing current market platforms.
Phase II (2–4 years): Promote SME bond issuance and integration of risk capital. Development of high-yield bond platforms and innovative instruments will be prioritized.
Phase III (4–6 years): Institutionalize issuer diversity, develop long-tenure products, and transition toward creating a dedicated corporate bond market regulator.
Policy Tools and Global Alignment:
Government & RBI Safety Nets: Initiatives include the Corporate Debt Market Development Fund (CDMDF) and the Guarantee Scheme for Corporate Debt (GSCD) to stabilize markets and lower risks.
SEBI Enhancements: SEBI has already acted to enhance transparency (stricter disclosure norms) and improve market participation through the Request for Quote (RFQ) platform and online bond platforms.
Global Best Practices: The recommendations align with global models that promote liquidity and transparency, such as the US’s TRACE system and the EU’s MiFID II/MiFIR frameworks.
Policy Relevance
A well-developed corporate bond market is essential for India’s economic transformation, providing diversified long-term funding for infrastructure, financial stability, and sustainable/green finance. Decisive, coordinated implementation of the proposed six-year roadmap is crucial to diversify debt away from bank lending and evolve the financial system into a cornerstone for Viksit Bharat @2047.
Follow the full report here: NITI Aayog Report on Corporate Bond Market