A recent analysis by global consultancy KPMG indicates a notable deceleration in private equity (PE) investment activity within India for the year 2025. The slowdown is attributed primarily to external geopolitical factors and uncertainty surrounding international trade policies.
Quantifying the Slowdown: A Look at the Numbers
According to KPMG's quarterly report, 'Pulse of Private Equity Q3'25', the total value of PE investments in India stood at just $14.9 billion across 217 deals by the end of the third quarter of 2025. This figure presents a stark contrast to the robust activity witnessed in the preceding year, 2024, which saw a total of $26.3 billion invested across 289 deals.
Should the current investment pace continue through the final quarter, 2025 is projected to be the slowest year for PE investment value since 2019, and the year with the lowest deal volume since 2020. This marks a shift from the highly optimistic trajectory observed between 2020 and 2024, a period during which India consistently attracted over $20 billion in PE capital annually.
Underlying Strength Amidst Short-Term Softness
Despite the present softness in deal-making, KPMG emphasizes that India's long-term appeal for private equity capital remains fundamentally strong. The report cites the country's compelling macroeconomic indicators as the core reason for sustained investor confidence.
Nitish Poddar, Head of Private Equity at KPMG in India, elaborated on this perspective. He highlighted India's incredibly strong macroeconomic fundamentals, its growing population which includes the world's largest working-age demographic, and high domestic savings rates. "All of this makes India a very attractive domestic consumer story," Poddar stated, noting it is a significant draw for investors seeking to build and scale India-based businesses.
Evolving Strategies and Sectoral Focus
The report details an evolution in how global PE firms are operating within the Indian market. Firms are increasingly acting as business builders rather than passive financial investors. This involves acquiring majority stakes and investing operational expertise to scale portfolio companies.
KPMG outlines several strategic approaches being adopted:
- Identifying niche sector businesses as platforms to acquire complementary companies and create larger, diversified entities.
- Consolidating similar small businesses through 'roll-up' strategies to drive greater value and profitability.
- Targeting investments in businesses that can provide services to other companies within the PE firm's global portfolio, creating synergistic value across the investment ecosystem.
In terms of sectors, technology continues to be the largest magnet for PE capital in India. Significant interest is also being shown in the healthcare and life sciences space, reflecting broader global and domestic trends.
Globally, PE investment demonstrated resilience in Q3 2025, reaching $537 billion across 4,062 deals. This context underscores that India's current slowdown is more a reflection of specific caution than a broad retreat from emerging markets. The consensus from the analysis is clear: while navigating short-term global headwinds, India's foundational growth story continues to make it a premier destination for long-term private equity investment.
