Sovereign green bonds continue to anchor India market: Report

About $180 billion of sustainable bonds issued in Asia-Pacific during the 2020-2021 boom are set to mature in 2026, a report said, adding that in India, issuance is likely to remain modest, with sovereign green tranches continuing to anchor the market amid limited corporate participation.

India’s sustainable bond issuance, already relatively small, declined to $2 billion in 2025. Green bonds still dominated volumes with a 62 per cent share. The remainder of issuance was of social bonds, said the S&P ‘Global Sustainable Bonds Outlook Report’.

“Green labeled instruments could benefit from the country’s climate goals. These will require annual investment of $250 billion until 2047, according to the Framework of India’s Climate Finance Taxonomy,” it mentioned.

Conversely, social bonds around themes of financial inclusion and women empowerment, for instance, are likely to remain niche. Investors see them as more complex. The government has issued additional tranches of Indian rupee-denominated sovereign green bonds, reinforcing a domestic green yield curve, and attracting demand from institutional investors.

Sovereign issuances accounted for 94 per cent and 58 per cent of the country’s green bond and overall sustainable bond market, respectively, in 2025. Still, the Reserve Bank of India also faced challenges like a green bonds auction cancellation in June due to high yield demands.

India already met its target of 50 per cent installed renewable energy capacity in 2025, five years early.