A new report released today [1 July 2021] calls for the development of a deep, liquid corporate bond market in India to fund the country’s large infrastructure investment needs and its transition to a low carbon economy.
Unleashing the potential of the Indian Debt Capital Markets is the first report by the City of London Corporation led UK-India Capital Markets Working Group, which was welcomed by India and the UK during the India-UK Economic Financial Dialogue 2020.
The publication, put together in partnership with law firm DLA Piper, will be launched at an online event during a virtual visit to India this week by the City of London Corporation Policy Chair Catherine McGuinness.
The report provides 15 key recommendations to increase the depth of the bond market in India as well as making it easier for Indian companies to issue bonds overseas.
It provides a roadmap for deepening the domestic and offshore corporate bond market for India in a post- pandemic world, as well as transforming it into a competitive source of financing for issuers, and an attractive investment for a wide range of investors.
The recommendations cover improving the efficiency of the primary markets, deepening liquidity in secondary markets, developing the ecosystem of products, and targeted tax, regulatory and reporting interventions to help address issues faced by issuers and investors in accessing domestic and international debt capital markets.
The report follows publication earlier this year by the UK and Indian governments of an Enhanced Trade Partnership and India-UK Roadmap to 2030, which contained a range of objectives covering financial and professional services, including boosting cooperation in green finance to help drive forward clean, sustainable infrastructure projects in India.
City of London Corporation Policy Chair Catherine McGuinness said:
“If implemented, these recommendations could help fund India’s infrastructure investment needs and enhance its journey to a low carbon economy.
“Growing liquidity, accessing capital at reasonable cost, developing the corporate bond market, and adopting global best practice are all part of that plan.
“India’s capital markets have enormous potential to attract capital, and the UK provides access to a large and diversified global capital pool, as shown by the successful issuance of Masala bonds in London.
“I therefore hope these recommendations are taken forward, and look forward to speaking to government and industry figures in the UK and India to explore next steps.”
Associate Professor SPJIMSR and India Co-Chair of the City of London Corporation India -UK Capital Markets Working Group Ananth Narayan said:
“Under the aegis of the City of London Corporation, our working group of seasoned practitioners and experts from India and UK have put together a series of recommendations that we believe can help India’s debt capital markets better fund India’s immense growth potential.
“The wide-ranging recommendations span areas such as primary issuances, secondary markets, taxation, regulations, product & market infrastructure, and ESG.
“While much progress has been made over the years in each of these areas, we still have miles to go – and the prize of sustainable growth is worth any and all effort.”
Director, Head of Debt Capital Markets, London Stock Exchange Shrey Kohli said:
“This wide ranging report from the India-UK Capital Markets Working Group builds upon its previous work under the auspices of the India-UK Financial Partnership, and will further enable the growth of a robust debt capital markets ecosystem in India and support Indian companies internationally, through centres like London Stock Exchange.
“Well functioning public markets underpin growth, innovation, job creation and the transition to a low carbon economy. In recent years, we’ve seen how public markets channel international investment into India’s modern infrastructure, build sustainable energy capacity, and support internationalisation of the Rupee. We look forward to the report advancing practical policy recommendations in support of the upcoming India-UK Financial Markets Dialogue.”
Partner, Capital Markets, and UK Head of the India Practice at DLA Piper Joywin Mathew said:
“We are delighted to have partnered with the City of London Corporation and the members of the Working Group on this report which identifies the factors which would encourage the development of a vibrant and resilient capital markets in India.
“Each member of the Working Group and the institutions which they represent have brought to the report their expert insights into how the offshore and onshore debt capital markets in India could be further developed and supported.
“We look forward to further contributing to the ongoing discussions on the recommendations made in this report as they are taken forward by the government and policymakers in India.”
The City Corporation has a longstanding programme of work in India, and opened a representative office in Mumbai 13 years ago. More than 15 Indian financial firms have offices in London and many have branches across the UK.