India Inc. will require an estimated Rs 130-140 lakh crore in debt funding over fiscals 2027-2031 as the country pursues its ambition of becoming a USD 30 trillion-plus economy by 2047, according to Crisil’s Debt Market Yearbook 2026.
The report said non-sovereign debt as a proportion of GDP will need to rise sharply from the current 84 per cent to 140-150 per cent by 2047, taking the outstanding non-sovereign debt pool to more than USD 45 trillion. It added that a diversified credit landscape, including a significantly larger debt capital market, will be critical to meeting the country's long-term financing requirements.
Corporate Bond Market Grows, But Remains Small
India's corporate bond market has grown at an annualised rate of around 11 per cent since fiscal 2016, with outstanding corporate bonds reaching Rs 59 lakh crore in FY26. However, corporate bonds account for just 22 per cent of the domestic debt capital market, compared with 74 per cent for government securities.
Corporate bond issuances moderated marginally to Rs 10.9 lakh crore in FY26 from a record Rs 11 lakh crore in FY25, suggesting a pause in the market's recent momentum.
Crisil said the market continues to face structural constraints, including concentration among highly rated issuers, limited retail participation, shallow corporate bond repo markets, a lack of market makers and weak secondary-market liquidity.
Low Liquidity and Investor Concentration Remain Key Challenges
Retail investors account for less than 5 per cent of the corporate bond market, while insurance and pension funds have less than 3 per cent exposure to non-government and non-AAA papers. Average daily market turnover has also remained below 0.25 per cent since fiscal 2016, highlighting the limited liquidity in the secondary market.
The report said these constraints have restricted the depth and breadth of the market, particularly for lower-rated issuers seeking access to market-based funding.
Policy Push to Deepen Debt Markets
Several policy and regulatory measures have been introduced to improve price discovery, enhance liquidity and widen investor participation. These include the request-for-quote platform for bonds, an asset management company repo clearing platform, the Corporate Debt Market Development Fund and measures to strengthen market-making and total return swaps.
Other initiatives include the Online Bond Platform Provider framework, lower corporate bond ticket sizes, revised electronic book provider rules, specialised investment funds and efforts to expand foreign portfolio investment in government securities.
However, Crisil said secondary-market liquidity remains weak, institutional investors continue to dominate the market and access to funding remains limited for lower-rated issuers.
Securitisation and Municipal Bonds Could Expand Funding Channels
Crisil said the corporate bond, securitisation and municipal bond markets will each play a distinct role in supporting India's long-term economic growth.
While corporate bonds can enable more efficient capital allocation and market-based pricing, securitisation can improve credit availability through capital recycling and risk distribution. Municipal bonds, meanwhile, can provide a market-based funding channel for urban infrastructure development.
The report said India's debt ecosystem will need greater diversification across the rating spectrum, stronger risk-intermediation mechanisms and wider investor participation. It also called for measures such as covered bond legislation, greater government support for securitisation, increased bond issuance by larger urban local bodies and pooled issuances for smaller municipalities.
As India seeks to build a USD 30 trillion-plus economy by 2047, Crisil said a deeper, broader and more liquid debt capital market will be essential to ensure the availability of large volumes of low-cost capital across sectors and economic cycles. |
