India PE-VC investments drop 17% in 2025; global uncertainty may slow 2026 capital deployment: Report

India’s private equity and venture capital (PE-VC) investments declined about 17% year-on-year to $36 billion in 2025, according to Bain & Company’s India Private Equity Report 2026, developed in collaboration with the India Venture and Alternate Capital Association (IVCA).

The report said tighter global liquidity conditions and broader technology disruptions could weigh on capital deployment this year. It added that capital deployment in 2026 is expected to be concentrated in domestically aligned sectors such as consumer and retail, manufacturing and industrials, and financial services, supported by policy tailwinds and structural demand drivers.

According to the report, the decline in investment value in 2025 was primarily driven by a reset in large-cap private equity activity due to valuation gaps, tighter leverage, slower exits, and global capital allocation trade-offs, with traditional PE investments contracting by around 33% year-on-year. In contrast, venture capital and growth investments remained resilient, growing by nearly 18% and altering the overall investment mix.

However, deal activity remained robust last year, the report noted. Transaction volumes reached nearly 1,700 deals in 2025, up around 10% year-on-year, indicating sustained investor interest. At the same time, average ticket sizes declined from about $30 million to $23 million, reflecting a shift toward smaller and more selective investments. Sub-$100 million transactions accounted for nearly 70% of PE deal volumes, compared with around 50% in 2024, the report added.

“This is not a cyclical slowdown—it marks a structural shift in how capital is deployed. With large-cap deals constrained by valuation gaps and tighter leverage, investors are pivoting toward mid-sized opportunities where operational value creation and platform-building can drive returns. Resilient deal volumes alongside smaller ticket sizes reflect a market that is broader, more selective, and increasingly execution-led,” said Aditya Shukla, Partner and head of the India Private Equity practice at Bain & Company.

The report further said capital is increasingly shifting toward domestically focused sectors, led by consumer and manufacturing.

“Global uncertainty is increasingly localising the India investment playbook. As geopolitical shifts and trade volatility persist, investors are focusing on India-for-India opportunities, with capital flowing toward sectors such as consumer, industrials, and financial services where demand is domestically anchored and less exposed to external cycles,” said Prabhav Kashyap, Partner, Bain & Company.