Private equity investment activity in India witnessed a significant deceleration in 2025, mirroring a climate of global economic uncertainty driven by geopolitical shifts and changing trade policies. This is the key finding from KPMG's latest Pulse of Private Equity Q3'25 report, released in December 2025.
A Notable Decline in Deal Value and Volume
The data reveals a sharp contraction in both the value and number of transactions. By the end of the third quarter of 2025, PE investments in India stood at USD 14.9 billion across 217 deals. This figure paints a stark contrast to the full-year 2024 totals of USD 26.3 billion spread over 289 deals. KPMG's analysis suggests that if the current quarterly pace continues, 2025 is on track to become the weakest year for private equity investment in the country since 2019, and the slowest for deal volume since 2020.
The consulting firm attributes this slowdown primarily to external factors. Uncertainty surrounding US tariff policies and persistent geopolitical tensions have made it increasingly challenging for investors to forecast risks and potential returns, leading to a more cautious approach.
Long-Term Confidence and a Strategic Shift
Despite the near-term moderation, the report underscores that the fundamental interest of global private equity investors in the Indian market remains strong. The period from 2020 to 2024 saw India consistently attract over USD 20 billion in PE capital annually, with 2024 marking a peak in activity.
KPMG points to India's robust macroeconomic fundamentals, favourable demographic profile, growing domestic consumption, and strong capital market performance as core pillars supporting continued long-term engagement. A significant evolution noted in the report is the maturation of the PE ecosystem in India. Global firms are increasingly adopting a 'business builder' model, moving beyond passive financial investment.
This strategic shift involves establishing permanent local offices and teams, pursuing majority or controlling stakes in companies, and taking an active role in the operational and strategic decision-making of their portfolio companies. This hands-on approach is aimed at unlocking greater value and driving sustainable business growth.
Sectoral Focus and Future Outlook
From a sector perspective, technology, healthcare, life sciences, and financial services continue to command significant private equity interest. Within the technology space, the focus has evolved from traditional IT services towards software-as-a-service (SaaS) models. There is also expanding interest in manufacturing, particularly segments enabled by artificial intelligence.
In financial services, activity spans a wide range, including banking, non-banking financial companies (NBFCs), insurance, wealth management, and fintech. The report also highlights the growing size of India-focused funds, with raises exceeding USD 1 billion becoming more frequent—a sign of deeper institutional commitment.
Looking ahead, KPMG expects the current slowdown in private equity investment to persist until there is greater clarity on global trade and tariff policies. The report also cautions that as market conditions eventually stabilise, increased competition for high-quality assets could put upward pressure on valuations.
