PE-VC investments in India fall 36% to $20.5 billion across 604 deals in H1 CY26; Q2 weakest in six years

Private equity (PE) and venture capital (VC) investments in India declined sharply in the first half of 2026 as geopolitical uncertainties, elevated crude oil prices, currency volatility and valuation mismatches weighed on investor sentiment.

According to the latest EY-IVCA report, India attracted $20.5 billion in private equity and venture capital investments across 604 deals during the January-June 2026 period, down 36% from $31.8 billion across 734 deals in the corresponding period last year. Compared with the second half of 2025, investment value fell 29%, while deal volume declined 19%.

The slowdown was particularly evident in the April-June quarter, which the report described as the "weakest quarter" for PE/VC investments by value in the past six years. Average monthly investments declined to $3.4 billion in H1 2026 from $5.3 billion a year earlier, the report said.

"H1 2026 recorded $20.5 billion in PE/VC investments, 36% lower than investments in H1 2025 ($31.8 billion) and 29% lower than in H2 2025 ($29.0 billion). The number of deals in H1 2026 was 18% lower year-on-year," said Vivek Soni, Partner and National Leader, Private Equity Services, EY.

Real estate tops investment charts

Despite the broader slowdown, real estate emerged as the largest investment sector during the first half of the year, attracting $4.1 billion across 41 deals, a 12% increase over the same period last year. Technology ranked second with $3.1 billion across 101 deals, although investments in the sector declined 18% year-on-year. Financial services followed closely with $3 billion across 84 transactions, down 27% from a year ago.

As per the report, growth investments dominated the deal landscape, accounting for $7 billion across 111 deals, followed by buyout investments worth $5.4 billion across 22 deals. Startup investments stood at $5.3 billion across 396 transactions, reflecting a 22% decline in value despite higher deal activity. Credit investments and PIPE transactions also witnessed sharp declines.

Pure-play PE/VC investments, excluding real estate and infrastructure, fell 29% year-on-year to $14.2 billion, while investments in the real estate and infrastructure asset class declined 47% to $6.3 billion.

The report highlighted that large-ticket transactions continued to dominate the market, with 46 deals exceeding $100 million, accounting for $13 billion, or nearly 64% of total investment value during the half-year. However, both the number and value of large deals were significantly lower than the previous year. The biggest transaction was the $1.8 billion acquisition of Royal Challengers Bengaluru by Blackstone, Bolt Ventures and others.

Exit activity also slows

Investor exits also moderated during the period, with PE/VC firms recording $9.4 billion across 95 exits, representing a 29% decline in value compared with the first half of 2025, the report noted.

Open-market exits remained the preferred route, accounting for $4.1 billion, or 44% of the total exit value, followed by strategic exits worth $3.4 billion. Infrastructure led the exit charts by sector with $2.3 billion, followed by media & entertainment and financial services.

The largest exit during the period was Macquarie's $1.6 billion sale of its toll-road portfolio to Vici.

Data centres emerge as a bright spot

While overall investment activity remained subdued, EY highlighted India's data centre ecosystem as one of the most attractive themes for private capital.

Between 2021 and June 2026, the sector attracted approximately $45.3 billion in investments and commitments across 86 deals, with activity reaching an all-time high in the first half of 2026. The report attributed this surge to rising data consumption, cloud adoption, artificial intelligence workloads and growing demand for digital infrastructure.

"The outlook for data centres in India remains highly favourable. Investors are increasingly backing not only operating data centres but also the broader ecosystem comprising telecom infrastructure, semiconductor design, cloud infrastructure and AI computing platforms," the report noted.

Outlook remains cautiously optimistic

Despite the weak first-half performance, EY believes investment activity could improve over the medium term as macroeconomic conditions stabilise. The upcoming quarterly earnings season is expected to influence investor confidence, while the FCNR deposit scheme is likely to attract significant dollar inflows and help stabilise the exchange rate, it added.

According to Soni, investor sentiment remained cautious due to geopolitical tensions, higher crude oil prices, rupee depreciation and valuation gaps between buyers and sellers. However, he said upcoming corporate earnings, expected inflows through the FCNR deposit scheme, improving valuations and supportive government policies could help revive deal activity.

"While near-term uncertainties emanating from global factors remain, improving valuation levels, calibrated government policy interventions and India's strong long-term growth potential are expected to create investment opportunities, supporting an optimistic outlook for PE/VC activity in the mid to long term," Soni said.

Even as investments slowed, fundraising remained robust. PE/VC funds raised $21.2 billion across 48 fundraises during the first half of 2026, more than doubling the $10.1 billion raised a year earlier. The largest fundraising was Bain Capital's $10.5 billion Asia Fund VI, surpassing its original target of $7 billion.