In March 2025, the size of India’s overall bond market was approximately $2.78 trillion. Out of this, Government bonds accounted for $2.16 trillion, and the remaining $626 billion was corporate bonds. India’s bond market has been growing steadily over the years, with the growth rate accelerating in the last couple of years.
According to NITI Aayog’s “Deepening the Corporate Bond Market in India” Report (December 2025), India’s corporate bond market has grown 12% annually in the last decade (FY 2015 to 2025). In this article, we will examine what is leading to the growth of India’s bond market and attracting retail and foreign investors.
What is attracting investors towards India’s bond market
In the earlier section, we saw that India’s overall bond market is expanding rapidly. Various factors are attracting domestic and foreign investors towards the bond market. Let us look at the factors that are attracting domestic investors towards the bond market.
1. SEBI’s enhanced disclosure norms
SEBI has introduced enhanced disclosure norms for bond issuers, thereby enhancing transparency and accountability. The norms include provisions related to financial information, corporate governance disclosures, and key events that can influence an investor’s decision. The enhanced disclosure norms are beneficial for all investors, including domestic and foreign investors.
2. Reduction in the minimum face value of securities
Before October 2022, the minimum face value of debt securities was Rs. 10 lakhs. The high minimum face value of debt securities acted as an entry barrier for retail and non-institutional investors. To address this challenge, SEBI brought down the minimum face value of debt securities to Rs. 1 lakh in October 2022.
In 2024, SEBI further reduced the minimum face value of debt securities to Rs. 10,000. SEBI has done this to encourage retail participation. The Rs. 10,000 minimum face value of debt securities is within the reach of most individuals across income segments.
3. Emergence of OBPP platforms
An Online Bond Platform Provider (OBPP) is a SEBI-registered digital platform that allows buying and selling of bonds and other debt securities. The platform leverages technology to act as an intermediary for bond investing, bringing various types of bonds within reach of retail investors.
SEBI issued OBPP Regulations in 2022. Since then, 29 OBPPs have registered with SEBI and enabled fixed-income investments worth over Rs. 10,000 crores (as of Jan 2026, as per OBPP India website) among retail and other investors.
Some of the SEBI-registered OBPPs include Bondbazaar, Aspero, Wint Wealth, Grip Invest, India Bonds, Jiraaf, Bondskart, etc. These platforms are raising awareness of investing in bonds and other fixed-income products. They are offering retail investors the opportunity to participate in new bond issues in the primary market as well as buy/sell them in the secondary market.
Some of the factors attracting foreign investors towards India’s bond market include the following:
1. Inclusion of Indian G-secs in global bond indices
Over the last couple of years, Indian G-secs have been included in global bond indices, tracked by several foreign investors. In June 2024, Indian G-secs were included in the JP Morgan Emerging Market Bond Index. The Indian G-secs started with a 1% weightage, increasing by 1% every month till it reached 10%. The move led to foreign investors pouring in an estimated $25 billion.
In September 2025, Indian G-secs got included in the FTSE Emerging Markets Government Bond Index (EMGBI). The Indian G-secs will have a total weightage of 10%, phased in on a monthly basis over a six-month period in six equal tranches.
Indian G-secs were expected to be included in the Bloomberg Global Aggregate Index in February 2026. However, in January 2026, Bloomberg announced that stakeholders indicated broad support, but the decision was delayed due to operational issues and will be reviewed again by mid-2026.
2. Higher yields
Currently, as of 22nd January, India’s 10-year Government Bond is offering a 6.63% yield. In comparison, the US 10-year Treasury yield is 4.27%. The Japanese 10-year bond yield is 2.24%. China’s 10-year bond yield is 1.83%. So, the yields on Indian 10-year Government bonds are superior compared to those on Government bonds from US, Japan, China, and many other countries.
The higher yields offered by Indian G-secs are attractive for foreign investors. However, foreign investors must keep an eye on the Indian Rupee, which has been depreciating against the US Dollar and recently hit an all-time low. The depreciation of the Indian Rupee against the US Dollar reduces the return earned by foreign investors on Indian Government bonds.
3. Sovereign credit rating upgrade
In 2025, three major agencies upgraded India’s sovereign credit rating. In May 2025, Morningstar DBRS upgraded India’s sovereign credit rating from BBB (low) to BBB. In August 2025, S&P Global made a major announcement of an upgrade. They upgraded India’s sovereign credit rating from BBB- to BBB. Finally, in September 2025, Rating and Investment Information, Inc (R&I), Japan, upgraded India’s sovereign credit rating to BBB+ (Stable).
The sovereign credit rating upgrades express confidence that the Indian Government’s debt levels are manageable, along with sustainable high GDP growth. India’s sovereign credit rating increases the confidence of foreign investors in investing in India’s Government bonds.
India’s bond market is expanding fast
India’s bond market has been seeing growing interest from domestic and foreign investors. The inclusion of India’s Government bonds in global bond indices and the higher yields are attracting foreign investors towards Indian bonds.
Similarly, the reduction in the minimum face value of securities and the emergence of OBPP platforms are bringing domestic investors into the Indian bond market. Higher investments in the bond market are helping bring in capital that can be used by bond issuers, such as the Government, corporates, PSUs, etc., to build the required infrastructure to realise India’s dream of becoming a developed nation.
