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Bonding the Gap

24 Sep 2025

India has emerged as one of the rapidly growing debt markets in the world, with a remarkable size of ~Rs 248 lakh crore as of June 2025. Its robust compound annual growth rate (CAGR) of ~12.6% from ~Rs 137 lakh crore in fiscal 2020 demonstrates its resilience and significance in the Indian economy.

It also reflects India’s growing capital needs, supportive policy measures and increasing institutional demand across debtinstruments.

Despite this, the Indian market is underpenetrated compared with the developed and emerging economies. A large part of the funding source for Indian corporates has been borrowing from banks, which had limited the penetration of corporate bonds.

As of March 2025, the Indian corporate bonds-to-gross domestic product (GDP) ratio was ~16.2%, lower than many countries such as the US (~37.6%), Republic of Korea (~75.2%) and China (~36.9%).

Corporate bonds account for ~21.6% of the total corporate debt in India, which is lower than the 30-50% share seen in other Asian countries.

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