Private Capital Investments in India May Slow Down in 2026: Bain Report

However, the report also stated that despite global uncertainties, India's private equity and venture capital (PE-VC) market continues to be supported by strong domestic fundamentals.

"India's PE-VC outlook for 2026 remains cautious.... as AI-driven technology disruptions and tighter global liquidity weigh on capital deployment," the report stated.

According to the report, this year the investments are expected to remain concentrated in domestically driven sectors such as consumer and retail, manufacturing and industrials, and financial services.

The report said these sectors are likely to benefit from policy support and long-term structural demand trends in the country.

According to the report, capital is increasingly expected to move towards sectors such as data centres, semiconductor ecosystems and power infrastructure due to rising demand for computing capacity and growing enterprise adoption of artificial intelligence technologies

Sharing details about the performance of the sector in 2025, the report stated that India's private equity and venture capital market entered a more disciplined phase during the year.

The report, developed in collaboration with the India Venture and Alternate Capital Association (IVCA), stated that total PE-VC investments in India declined around 17 per cent year-on-year to USD 36 billion in 2025.

According to the report, factors such as tariff-related uncertainty, valuation mismatches and tighter leverage conditions affected overall investment activity.

However, the report noted that both global and domestic capital availability remained robust during the year. The decline in investment value was mainly driven by weakness in large-cap private equity activity.

The report highlighted that deal activity continued to remain strong despite moderation in investment values.

According to the report, deal volumes rose nearly 10 per cent year-on-year to around 1,700 transactions in 2025, indicating continued investor interest in the Indian market.

However, average deal sizes declined from around USD 30 million to USD 23 million as investors increasingly focused on smaller and more selective investments.

The report also highlighted the growing role of artificial intelligence in private equity investments.

"Artificial intelligence is emerging as a core investment lens in private equity, reshaping how investors evaluate opportunities and drive value across portfolio companies," the report stated.

The report also noted that investment activity in generative AI-native applications increased significantly during 2025.

The report further stated that the rapid expansion of AI-driven data centres is opening up new investment opportunities in infrastructure and related services.

- ANI