India’s corporate bond market is undergoing a significant transformation, with outstanding issuances reaching approximately 53.6 trillion INR as of early 2025. Despite a robust 12% annual growth rate over the last decade, the market remains heavily concentrated among top-rated issuers. Current data shows that while fundraising through bonds is increasingly competitive with bank credit, secondary market liquidity continues to be a bottleneck. Recent 10-year benchmark government bond yields have stabilized around 6.67%, providing a reference for corporate pricing. However, corporate bonds typically command a spread of 0.8% to 1% over sovereign debt to attract investors. Merchant bankers are now pushing for a strategic shift in regulatory policy. They have formally requested that the Securities and Exchange Board of India (SEBI) allow borrowing against corporate bonds. This move is designed to boost underwriting capacity, allowing intermediaries to manage risks more effectively during periods of weak debt demand. The industry is also advocating for an anonymous bond-trading platform. Proponents argue that such a platform would mirror the efficiency of equity markets, facilitating better price discovery and deeper liquidity. Currently, much of the trading is handled through private placements or specialized request-for-quote platforms, which can limit the participation of smaller players and retail investors. To further broaden the ecosystem, bankers are seeking access to more diverse funding sources. This comes at a time when retail participation is rising, aided by SEBI’s decision to reduce the minimum face value of privately placed bonds to 10,000 INR. Total fresh issuances are projected to hit 11 trillion INR in the coming fiscal year, underscoring the urgency for improved liquidity mechanisms. While SEBI recently introduced a voluntary "liquidity window" to help investors exit holdings, early adoption by issuers has been slow due to complex compliance requirements. Merchant bankers believe that enabling repo transactions—where bonds can be used as collateral for short-term loans—is the missing link needed to give market makers the flexibility to provide continuous buy and sell quotes. Strengthening these structural components is seen as essential for India to reach its goal of a 100 trillion INR bond market by 2030. Success will depend on whether regulators can balance the need for tighter oversight with the flexibility required for intermediaries to maintain a vibrant, liquid secondary market.