Private Equity Slows in 2025, but India’s Long-Term Appeal Remains Intact
Private equity (PE) investment in India has softened in 2025, weighed down by global uncertainty rather than domestic weakness, according to a report by KPMG.
As of the end of the third quarter of 2025, PE investments in India stood at $14.9 billion across 217 deals, sharply lower than $26.3 billion across 289 deals in all of 2024, the firm said in its Pulse of Private Equity Q3’25 report.
If current trends persist, 2025 could mark the slowest year for PE investment since 2019, and the weakest year for deal volume since 2020. The slowdown has been driven largely by concerns around US tariff policies, geopolitical tensions, and broader global risk aversion.
Yet KPMG is clear on one point: this is a pause, not a pullback.
“Despite experiencing some softness at present, India continues to be viewed as a very attractive jurisdiction for PE investment,” the report noted, citing strong macroeconomic fundamentals, a large and young population, favourable demographics, and rising domestic consumption.
A sharp contrast with recent history
The current slowdown stands in contrast to the robust five-year run between 2020 and 2024, when India consistently attracted over $20 billion in PE deal value annually. Deal activity peaked in 2024, with a record 289 transactions, underscoring the depth of investor interest before global conditions tightened.
Importantly, KPMG highlighted a structural shift in how global PE firms operate in India. Investors are increasingly behaving as business builders, acquiring majority stakes and committing operational capital to scale companies—rather than pursuing minority, purely financial bets.
To support this hands-on approach, many international PE funds have expanded their on-ground presence in India, deepening local relationships and working more closely with portfolio companies.
Why India still stands out
India’s investment appeal remains anchored in fundamentals.
“India has incredibly strong macros, the largest working-age population in the world, and some of the highest savings rates globally,” said Nitish Poddar, Head of Private Equity at KPMG in India. “That makes India a compelling domestic consumption story and creates significant opportunity for PE investors to build and scale businesses.”
At an operational level, PE firms are adopting varied strategies. Some are backing niche sector leaders and using them as platforms for bolt-on acquisitions. Others are rolling up fragmented markets, combining smaller businesses into larger, more efficient entities capable of driving profitability.
Another growing trend involves PE firms investing in companies that can serve other businesses within their global portfolios, creating synergies and value across ecosystems.
Sector focus and global context
Technology continues to attract a substantial share of PE capital in India, alongside growing interest in healthcare and life sciences, where demand visibility and long-term growth prospects remain strong.
Globally, private equity activity showed resilience despite uncertainty. In the third quarter of 2025, global PE investments reached $537 billion across 4,062 announced deals, according to KPMG—highlighting that capital is still flowing, albeit more selectively.
For India, the message is nuanced but reassuring. While 2025 may be a slower year for PE in absolute terms, investor conviction in India’s long-term story remains firmly intact. As global conditions stabilise, that confidence is likely to translate back into capital.