India`s bond market hits $2.69 trillion milestone
India’s bond market reached a valuation of $2.69 trillion by the end of December 2024, which marks a significant milestone in the country's journey towards becoming a $7-8 trillion economy in the next five years.
Capital formation in India will be increasingly driven by the expanding bond markets, with the corporate bond segment alone crossing $602 billion.
The rapid growth of the bond market comes at a time when India is gaining global recognition, particularly with the inclusion of its government bonds in major international indices, said the IndiaBonds.com report.
From January 31, Indian government bonds were phased into the Bloomberg Emerging Market (EM) Local Currency Government Index, following a similar move by JP Morgan, which had added Indian bonds to its index in June 2024.
According to data from the Clearing Corporation of India Ltd (CCIL) and the Securities and Exchange Board of India (SEBI), the ongoing global integration of India’s bond market is expected to attract higher foreign inflows.
With India’s Fully Accessible Route (FAR) bonds becoming a part of Bloomberg’s EM Index, foreign investment in the segment is likely to rise further, enhancing liquidity and strengthening the country’s financial ecosystem.
Experts believe that increased foreign participation will provide a significant boost to corporate bond investments as well.
The steady inflow of global funds will not only deepen the bond market but also support infrastructure and development projects crucial for India's economic expansion.
Once fully phased into global indices, India is set to join the ranks of China and South Korea as one of the largest players in the Bloomberg Emerging Market 10 per cent Country Capped Index.
Market analysts expect that this recognition will make Indian bonds more attractive to global investors, further solidifying India's position as a growing financial powerhouse.
According to reports, the robust domestic demand and increasing global confidence in Indian debt instruments will help the bond market to play a pivotal role in achieving the country's ambitious economic goals.
