India’s Bond Market in a Global Context: 2025 Edition

Introduction

In recent years, India’s bond market has expanded significantly through regulatory reforms, improved transparency, increased institutional participation, and the introduction of digital bond platforms. As of 2025, India’s fixed-income market continues to evolve, integrating more closely with global standards while retaining its unique structure.

This article places India’s bond market in a global context, comparing its size, structure, participation, and regulatory development with major bond markets worldwide.

What Defines a Global Bond Market?

A global bond market typically includes:

• sovereign government securities

• state or provincial bonds

• corporate and financial institution bonds

• municipal bonds

• securitised instruments (ABS, MBS, covered bonds)

• derivatives for hedging and interest-rate management

• robust secondary-market trading

Global markets such as the US, Europe, Japan, and emerging Asia offer large-scale, liquid, and diverse fixed-income ecosystems.

India’s Bond Market: 2025 Snapshot

India’s bond market includes:

• Government securities (G-Secs)

• State Development Loans (SDLs)

• PSU and quasi-sovereign bonds

• Corporate bonds

• Municipal bonds

• Securitised debt

• Bank capital instruments (AT1, Tier-2)

Key characteristics of India’s 2025 landscape:

• Growing digital adoption due to Online Bond Platform Providers (OBPPs)

• Continued emphasis on regulatory transparency

• Expanding participation by insurance companies, pension funds, and retail investors

• Increased issuer activity in corporate and infrastructure financing

India’s bond market remains one of the fastest-evolving in Asia.

Key Components of India’s Bond Market

1. Government Securities (G-Secs)

Largest and most liquid segment; form the benchmark yield curve.

2. SDLs

Important for state-level financing.

3. Corporate Bonds

High-rated issuers dominate issuance.

4. PSU & Quasi-Sovereign Bonds

Major borrowers across power, petroleum, finance, and infrastructure.

5. Municipal Bonds

Growing but still at early adoption levels.

6. Securitised Products

Asset-backed and mortgage-backed securities from NBFCs and HFCs.

7. Bank Capital Instruments

Used to meet Basel-III regulatory requirements.

Participation Trends: Global vs India

Global Markets

• Strong institutional investor base

• Large asset managers, pension funds, sovereign wealth funds

• Widely used derivative tools

India

• Banks, mutual funds, insurers, and pension funds lead participation

• Foreign investment gradually expanding

• Retail participation increasingly enabled through OBPPs

• Growing appetite for corporate and securitised bonds

• Participation depth is increasing year by year.

Government Bond Markets: Global Benchmarks

Government bond markets form the backbone of global debt ecosystems.

US Treasury Market

One of the world’s deepest and most liquid markets.

European Government Bonds

Multiple sovereign issuers under the Eurozone structure.

Japan Government Bonds (JGBs)

Large outstanding stock with long-duration offerings.

India G-Secs

• Mature auction framework

• Fully developed primary dealer system

• Robust settlement through CCIL

• Expanding range of maturities (short to ultra-long)

• Inclusion in global bond indices under consideration in past years

India’s sovereign market follows strong regulatory and operational frameworks.

Corporate Bond Markets: India in Perspective

Global

• Highly diverse issuers from multiple sectors

• Deep secondary-market liquidity

• Broad rating spectrum

India

• AAA–A issuers dominate

• Infrastructure and financial sectors lead issuance

• Secondary-market liquidity improving but concentrated

• Gradual entry of mid-market and new-age economy issuers

Corporate bonds in India continue to grow in diversity.

Securitisation Markets: India vs Developed Economies

Global (US/EU)

• Large RMBS, CMBS, ABS, and covered-bond markets

• Standardised disclosure, risk retention, and structuring practices

India

• Strong activity in vehicle loan, microfinance, consumer loan, and housing loan securitisation

• Growth led by NBFCs, HFCs, and fintech-originated loans

• ABS markets more active than RMBS in relative terms

India’s securitisation market is still maturing but expanding consistently.

Foreign Investment Participation

Foreign Portfolio Investors (FPIs) play a meaningful role globally.

Global

• High foreign ownership of sovereign and corporate debt

India

• FPI participation regulated under RBI and SEBI frameworks

• Special categories (FAR route, VRR) help facilitate access

• Participation varies based on global risk appetite and policy conditions

Foreign involvement continues to evolve with India’s inclusion in global frameworks.

Market Infrastructure & Regulations

India’s market infrastructure includes:

• RBI-managed government securities market

• Clearing Corporation of India Limited (CCIL)

• Exchanges for corporate debt

• NDS-OM and NDS-OM (Web) for G-Secs trading

• SEBI-regulated OBPPs

• Strong auditing, disclosure, and settlement norms

Globally, India is considered structurally robust in terms of operational safety and regulatory oversight.

Digital Bond Platforms & Retail Access

India has made significant progress in digital access:

• OBPP framework introduced by SEBI

• Platforms enabling transparent bond discovery

• Disclosures centralised for retail understanding

• Seamless order routing and settlement via exchanges

This development aligns India more closely with global digital bond markets, improving accessibility for retail participants.

Challenges and Opportunities Ahead

Challenges

• Lower secondary-market liquidity in corporate bonds

• Higher concentration of AAA/AA issuers

• Limited municipal bond participation

• Need for broader diversification and mid-market issuers

Opportunities

• Growing retail participation

• Increasing securitisation activity

• Expansion of ESG and green bond frameworks

• Global integration with index inclusion

• Rising digital distribution through OBPPs

India’s bond market continues to build momentum.

How BondScanner Helps Investors Navigate Bonds

BondScanner provides access to:

• issuer information

• coupon and maturity structures

• security type

• credit ratings

• yield and pricing (when available)

• offer documents and regulatory disclosures

These tools help investors explore and compare bond characteristics using available information.

BondScanner does not provide recommendations.

Conclusion

India’s bond market in 2025 reflects a maturing ecosystem—structurally robust, increasingly transparent, and steadily integrated into the global fixed-income landscape.

While differences exist compared to advanced markets, India continues to develop depth, digital access, and institutional participation.

Understanding India’s position in a global context helps investors interpret its strengths, long-term trajectory, and growing importance within global markets.

Disclaimer

This blog is intended solely for educational and informational purposes. The bonds and securities mentioned herein are illustrative examples and should not be construed as investment advice or personal recommendations. BondScanner, as a SEBI-registered Online Bond Platform Provider (OBPP), does not provide personalized investment advice through this content.

Readers are advised to independently evaluate investment options and seek professional guidance before making financial decisions. Investments in bonds and other securities are subject to market risks, including the possible loss of principal. Please read all offer documents and risk disclosures carefully before investing.