India’s private capital investments may remain cautious in 2026: Bain report

A report by Bain & Company forecasts India’s private equity and venture capital (PE-VC) investments will remain cautious in 2026, influenced by tighter global liquidity and AI-driven technology disruptions. Despite these challenges, domestic fundamentals continue to support the market, with sectors like consumer, retail, manufacturing, and financial services expected to benefit from policy support and long-term demand trends. Investments are also shifting toward AI-related sectors, including data centers, semiconductor ecosystems, and power infrastructure, driven by rising demand for computing capacity and enterprise AI adoption. The report, developed with the India Venture and Alternate Capital Association (IVCA), notes that PE-VC investments in India fell 17% year-on-year to USD 36 billion in 2025, primarily due to tariff-related uncertainty, valuation mismatches, and tighter leverage conditions. However, deal activity remained strong, with volumes increasing nearly 10% to around 1,700 transactions, though average deal sizes dropped from USD 30 million to USD 23 million. The decline in investment value was largely attributed to weaker large-cap PE activity, while global and domestic capital availability stayed robust. AI is emerging as a key investment theme, reshaping how investors evaluate opportunities and drive value across portfolio companies. The report highlights significant growth in generative AI-native applications and new infrastructure opportunities from AI-driven data center expansion. The cautious outlook for 2026 reflects ongoing global economic pressures, but domestic resilience remains a defining factor for India’s PE-VC market.