Finance Minister Nirmala Sitharaman today proposed a series of measures to deepen India’s corporate and municipal bond markets, including a market-making framework, new derivative instruments and enhanced incentives for large municipal bond issuances.
Presenting the Union Budget for 2026-27, Sitharaman said the government would introduce “a market-making framework with suitable access to funds and derivatives on corporate bond indices” to improve liquidity and participation in the corporate debt market.
As part of the effort to expand risk management tools, she also announced the introduction of “total return swaps on corporate bonds”.
1 January 2026
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Further on municipal bonds, the finance minister said the government would take steps to encourage larger cities to tap bond markets at scale. “To encourage the issuance of municipal bonds of higher value by larger cities, I propose an incentive of ₹100 crore for a single bond issuance of more than ₹1,000 crore,” she said.
The existing incentive scheme under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), which supports municipal bond issuances of up to ₹200 crore, will continue to benefit smaller and medium-sized cities, Sitharaman added.
