**Private Equity Investment in India Faces Slowdown in 2025**
Private equity investment activity in India has experienced a notable decline in 2025, reflecting global uncertainties stemming from geopolitical tensions and shifting trade policies, as highlighted in KPMG’s Pulse of Private Equity Q3’25 report. By the end of the third quarter of 2025, private equity investments in India totaled USD 14.9 billion across 217 deals, a significant drop from the USD 26.3 billion across 289 deals recorded in the entirety of 2024. KPMG warns that if the current pace continues, 2025 may emerge as the weakest year for private equity investment in India since 2019.
The report indicates that ongoing uncertainties regarding U.S. tariff policies and geopolitical conflicts have complicated risk and return forecasting for investors. Despite this slowdown, KPMG emphasizes that interest from private equity investors in India remains strong. Between 2020 and 2024, India consistently attracted over USD 20 billion in private equity investments annually, with deal volumes peaking in 2024.
KPMG attributes the sustained investor interest to India’s robust macroeconomic fundamentals, favorable demographic profile, growth in domestic consumption, and strong capital market performance. The report also notes a shift in strategy among global private equity firms operating in India, with many adopting a “business builder” approach. This strategy involves establishing local offices and teams, pursuing majority stakes, and actively engaging in operational and strategic decisions within portfolio companies.
The report states, “Global PE investors have invested significant effort into establishing their market presence in India. Many have recognized the necessity of having a local team and office to foster relationships and provide active support to their portfolio companies. To date, PE investment in India has largely been a controlled deal market, with investors preferring majority stakes to unlock value and drive growth. Many see their role as business builders rather than merely financial investors.”
Additionally, KPMG highlights the maturation of India’s private equity ecosystem, evidenced by the increasing size of India-focused funds. Fundraises exceeding USD 1 billion, once rare, have become more common, indicating deeper institutional engagement in the market.
From a sectoral perspective, technology, healthcare, life sciences, and financial services continue to attract private equity interest. Within the technology sector, investor focus has shifted from traditional IT services to software-as-a-service models, with growing interest in manufacturing segments as well.
In conclusion, while 2025 may present challenges for private equity investment in India, the underlying fundamentals and evolving strategies of investors suggest a resilient market poised for future growth.
**FAQ**
**Q: What factors are contributing to the slowdown in private equity investment in India in 2025?**
A: The slowdown is primarily attributed to uncertainties surrounding U.S. tariff policies and geopolitical tensions, which complicate risk and return forecasting for investors.
