NITI Aayog has proposed a comprehensive plan to strengthen India’s corporate bond market, aiming to make it a key source of long-term capital for the economy. The move comes as the corporate bond market in India remains small compared to countries like South Korea and China, with limited participation from retail investors, who account for less than 2 per cent of total investments.
To attract more individual investors, the think-tank has recommended the creation of Corporate Bond Savings Accounts (CBSAs), which would offer tax benefits under Section 80C, similar to equity-linked savings schemes. The proposal also suggests simplifying access to corporate bonds by enabling trading through demat accounts, mobile apps, and internet banking, lowering minimum investment thresholds, and facilitating small-ticket purchases through UPI.
NITI Aayog has further proposed several tax incentives. These include extending existing tax benefits to corporate bonds, aligning long-term capital gains taxes with equities and other instruments, reducing withholding taxes for foreign investors, and offering tax credits for first-time retail investors. Such measures are aimed at leveling the playing field between bonds, equities, and bank deposits as investment options.
In addition to tax and account reforms, the report emphasizes the need for stronger market infrastructure. This includes transparent pricing tools, standardised disclosures, and digital marketplaces to make bond trading easier and more efficient. The think-tank also recommends introducing new products like covered bonds backed by high-quality assets and fractional bond funds, allowing small investors to access diversified portfolios.
The proposals are designed to expand the corporate bond market from its current size of around 15–16 per cent of GDP to ₹100–120 lakh crore by 2030. If implemented, the reforms could broaden the investor base, improve liquidity, and position corporate bonds as a vital tool for long-term financing in India’s growing economy.
By making corporate bonds more accessible and rewarding for investors, NITI Aayog hopes to strengthen India’s financial system and support sustainable economic growth.
Also Read: 42 US states warn tech giants on unsafe AI chatbots