Introduction

India’s private equity (PE) market started 2025 on the heels of a transformative year. The previous chapter of this guide explored India’s resilience amid global headwinds, the continuity of its political leadership in an election year, and therefore how a favourable and stable policy climate fuelled a robust uptick in foreign direct investment (FDI) and PE deals. It examined emerging themes across key sectors such as manufacturing, space, defence, IT, healthcare, and clean energy, highlighting India’s continuing appeal as a global investment destination. As a milestone, in 2024, cumulative gross FDI inflows into India crossed USD1 trillion since April 2000.

2025 Thus Far: Overview and Broad Themes

The year 2025 has been marred by global uncertainties and significant disruptions, including long-simmering geopolitical tensions boiling over (both near and not-so-far), breakdown of US–India tariff negotiations resulting in up to 50% tariff imposition on a wide list of key Indian exports, and inflationary pressures, high interest rates and financial tightening in key developed markets. Notwithstanding these uncertainties, 2025 has largely sustained the momentum set last year, with India not only maintaining its position as one of the fastest-growing major economies but also retaining its leadership position in initial public offering (IPO) volumes (22% of all global IPO activity in Q1 2025) and attracting significant total FDI (USD17.5 billion in Q1 2025 versus USD19 billion in Q1 2024, despite a weakened rupee). India has navigated global trade pressures by progressing bilateral trade treaty discussions with key partners, initial steps towards a recalibration of its previously fraught economic relationship with China, and a landmark closure of a wide-spectrum India–UK free trade agreement (covering over 95% of tariff lines).

The current PE landscape is defined by several key trends and themes, a few of which will be explored further in this chapter.

• Continuing evolution and maturation of the Indian PE and venture capital (VC) ecosystem – It is argued that the interplay between deepening domestic capital and recalibrated (but not diminished) foreign participation has given rise to a more resilient, multi-tiered funding architecture, which can support companies across varied stages, risk profiles and economic cycles.
• Sectoral focus and sector highlights – In 2025, GPs are doubling down on sectoral depth and thesis-driven strategies that enable them to differentiate not just on capital, but on insight, domain fluency and value creation potential, while leveraging experience of existing teams and operating partners.
• Deal sophistication, creative structuring and exit strategies – PE in India has evolved beyond mere capital deployment to focus on strategic control, bespoke structuring and disciplined exit planning. Funds are reshaping investment models to gain deeper influence, align stakeholders and institutionalise value creation. This marks a clear shift towards maturity, not just in deal making, but in how outcomes are engineered across the investment life cycle.

Marking the Evolution of the Indian PE and VC Ecosystem

Historically, possibly other than at the very early or pre-seed stages, the Indian private risk-capital ecosystem has been reliant on foreign capital as the change-maker. For example, the likes of Sequioa and YC at the growth stage; Warburg, Accel, Temasek, Tiger, General Atlantic, TPG Growth and others at the mid-stage; and sponsors such as Carlyle, EQT(BPEA), Bain, and Blackstone at the late-stage, have generally led rounds and price-discovery, and played sheet anchor roles in cap-table support and making key life cycle decisions. Ultimately, even exits through IPOs have relied on sophisticated US investors or “qualified institutional buyers” for price setting and anchor positions in book building.

That paradigm, however, has shifted meaningfully. In 2025, examples abound of IPO-ready or mid-stage start-ups which have not raised much (if any) foreign capital (at least directly, ie, barring overseas limited partners (LPs) of domestic GPs). Indian-born or India-first growth and VC funds, such as Sauce.VC, Kalaari, Chiratae, IvyCap and InfoEdge, are more than likely to be the source of the first and even second cheques for budding founders. The immense popularity of the Indian version of “Shark Tank” and eye-popping viewership numbers for founder-run podcasts and vlogs, are testimony to the intense domestic public interest in the start-up space.

This cultural mainstreaming of modern entrepreneurship, fuelled by abundant analysis and content, quality and customised products, viral social media moments, and greater accessibility to digital financial infrastructure, has created not just more founders, but also more informed angels, syndicates and micro-VC participants willing to back ideas that reflect domestic needs.

As start-ups mature, domestic pools of capital and domestic GPs, which deploy a mix of overseas and Indian LP funding, are also beginning to take dominant positions. Kedaara and ChrysCapital, both on the back of record-setting fund closes, WestBridge, Peak XV, Multiples, and PE affiliates of financial institutions such as ICICI, 360One and Motilal Oswal, to name a few, have increased their deal counts and deal sizes tremendously, either leading, or being key participants in, several control and buyout deals and large ticket fundings. Add to that the burgeoning angel networks, corporate treasuries and holding companies, and immense founder and family office participation in PE and VC deals, and it is clear that the market has truly come of age.

This local capital boom is increasingly accompanied by greater operational involvement, governance rigour and sector-specific expertise. Such qualities were traditionally expected only from global strategics or marquee funds. Local GPs are leveraging their proximity to founders, cultural alignment and quicker decision cycles to win competitive processes.

Now, the above may be mistaken as a displacement or substitution of the role of, and the need for, FDI and investment from overseas PE sponsors and sovereign wealth funds. Far from it.

As a result of the market’s growing size, evolution and maturation, the role of overseas capital and FDI has also evolved. While blue-chip sponsors and marquee names worldwide continue to perform their erstwhile role in substantial part, these players are now also able to become more selective in their capital deployment, as well as take money off the table. Recent years have been notable for big ticket exits by foreign investors, whether as sell-downs in IPOs or control deals to strategic players. The liquidity and regulatory environment have improved to a point where global funds can rotate capital more frequently and recycle gains into new-age sectors such as climate-tech, AI-enabled technology, and green infrastructure, instead of being locked into legacy portfolios indefinitely.

Further, with early-stage discovery and risky bets being partially absorbed by domestic participants, who are not subject to the same dollar-denominated return expectations, overseas funds are free to balance their portfolio by cherry-picking de-risked assets, whether through minority cheques into IPO-ready companies, club deals with local GPs, or buy-out deals with a sector-focused thesis. Mature assets, backed by sound fundamentals, beget larger deal sizes and sizeable founder exits, further fuelling the ecosystem in a virtuous cycle.

In any ecosystem or market, the depth, size, variety and quality of participants are key to robustness and insulation from shocks. The Indian private risk-capital ecosystem clearly presents a promising picture for overseas PE investment on these fronts. India is not merely emerging as a choice destination for PE capital, but also as a blueprint for hybridised capital ecosystems in the Global South.

Sectoral Focus and Sector Highlights

In 2025, investors are now focused on building conviction in higher-quality platforms with strong unit economics, defensible moats and regulatory alignment. The days of broad-spectrum capital deployment spread across disconnected subsectors with loosely defined growth narratives are all but over.

This is reflected in the emergence of dedicated and highly specialised VC and PE funds that are built around single-sector or micro-theme strategies. These range from climate-tech and deep-tech, to consumer, health, agri-tech and fintech. Managers are not only sourcing deals at earlier stages in the company life cycle but are also actively shaping governance frameworks, regulatory readiness and product-market fit alongside founding teams. The capital they bring is more often than not accompanied by a clear post-investment playbook, and network access to mentors, specialised talent, potential customers, as well as further funding pools. From a fund formation perspective, LPs are now more willing to back emerging managers with cohesive strategies, provided they demonstrate edge through founder access, sectoral visibility or operational track records. Meanwhile, established GPs are reorganising internal teams to reflect sector-specific accountability.

As capital becomes more selective, so too does the nature of competition. GPs with sectoral depth are increasingly winning deals not just on pricing, but on strategic alignment and founder comfort. In this new paradigm, thematic precision is not just a positioning tool but a core determinant of portfolio quality, and eventual outcomes.

In addition, environmental, social and governance (ESG) considerations have moved from a compliance tick-box to a value creation tool. Impact-focused investing is gaining traction, with funds targeting sectors such as financial inclusion, renewable energy and sustainable agriculture while vetoing sectors and targets with a poor ESG scorecard. Blended finance models, which combine concessional capital with commercial PE, are also seeing early adoption in India.

The sectoral landscape for PE in India continues to evolve, reflecting shifts in macroeconomic priorities, policy support and investor appetite. Capital continues to flow into a blend of traditional high-return sectors and emerging, innovation-driven industries. Noteworthy sector highlights include the following.

• Healthcare and Pharma – 2025 sees continued enthusiasm for healthcare, a sector that combines defensibility with scale. PE funds are actively consolidating multi-speciality and single-specialty platforms (oncology, IVF, diagnostics) and backing pharma contract development and manufacturing (CDMO) players. Hospital chains are capitalising on demand through inorganic expansion, and planning IPOs, often following multi-year PE partnerships. From healthcare providers and diagnostic chains to health-tech platforms, medical devices companies and active pharmaceutical ingredients (API) manufacturers, the sector continues to see robust deal activity and attract high multiples.
• Consumer Brands and FMCG – VC funding into niche and audience-focused brands in consumer segments such as apparel, food service, jewellery and accessories, baggage and travel, fast-moving consumer goods (FMCG), and nutraceuticals, among others, continues to be a bright spot, driven by quick commerce volumes, increased private consumption, evolving consumer behaviour, and selective discretionary income, even as some older brands lose momentum. Consumer brands with digital distribution, strong direct-to-consumer (D2C) metrics, and offline scale-up potential remain the first port of call.
• Electric Mobility and Cleantech – From battery storage platforms to electric vehicle (EV) infrastructure, this sector remains a magnet for growth capital, particularly as several domestic start-ups are emerging, with a focus on research and development of new technologies, seeking to reduce reliance on rare earth elements and environmentally harmful chemicals.
• SaaS and AI Start-Ups – Global-scale enterprise software-as-a-service (SaaS) companies and AI-led workflow automation tools are drawing strong interest despite higher burn led by rising human resource costs and some valuation resets.
• Fintech 2.0 – Compliance-first, business-to-business (B2B) fintech models in areas such as wealth-tech and insure-tech are gaining favour as hot-spots for PE activity. Further, 2025 is seeing a pivot towards non-traditional segments: SME lending, housing finance, insurance tech, and supply chain financing. Many funds are choosing to invest in licensed NBFCs, acquiring control or structuring bespoke financing deals, as navigating regulatory clearances becomes easier.
• Agritech and Food Supply Chains – Efficiency plays in India’s vast agriculture and food sector are emerging as long-term bets, both in terms of premium-ised doorstep delivery in large cities, and broad-based procurement and supply chains aggregation across the country.

Deal Sophistication, Creative Structuring and Exit Strategies

As capital becomes more competitive and valuations more measured, funds are leaning into sophisticated deal structuring, deeper governance engagement and proactive exit planning. The shift is not merely stylistic. It reflects the maturation of both capital providers and investee companies, and a shared recognition that upside also lies in how deals are constructed, not just sourced.

From growth rounds to control plays

A defining trend is the increasing share of control-oriented and platform-style transactions as PE funds are demonstrating an appetite for control deals, sector-specific platforms and operational value creation. This shift mirrors a growing comfort among promoters with institutional partners, and a clear recalibration of investor appetite towards influence over strategic direction. Control transactions are no longer restricted to distress or small ticket targets. Increasingly, profitable, founder-led businesses are offloading significant stakes to PE funds to professionalise operations, manage succession planning or internal disputes, drive inorganic growth, or prepare for eventual listing. Promoters are more willing to cede control where alignment is visible, and institutional investors bring operational capability and sector experience to the table.

Creative structuring and investor alignment

Structuring sophistication has become a hallmark of high-quality Indian deals in 2025. The goal is increasingly to align incentives, manage downside risk, and accommodate diverse capital appetites. For example, representation and warranty insurance is now frequently used in competitive buyout situations to streamline negotiations, protect sellers and expedite closings, particularly in secondary transactions, addressing fund life and GP liability constraints.

LP co-investment has also grown significantly, particularly among large pensions and sovereign wealth funds, from the Middle East, North America, and South-East Asia. These LPs are seeking co-investment rights alongside lead GPs, improving alignment and reducing fee drag. These co-investments are less often built into fund documentation but generally negotiated bilaterally for large transactions. Similarly, the scale of many recent Indian deals has necessitated clubbing capital across multiple GPs, wealth funds or strategic investors. Club deals enable risk sharing, deepen value creation networks, and reduce concentration exposure for individual sponsors. More importantly, they foster alignment-driven underwriting, where capital partners collaborate on strategy, value levers and exit timelines.

Platform investing has also come of age in India. Funds are designing sector-specific platforms, through bolt-ons or common umbrella portfolio companies, in areas such as healthcare services, food, retail, consumer and SaaS. Fragmented supply bases, positive externalities and economies of scale, and recurring demand patterns make these sectors ripe for roll-ups. What differentiates today’s platform strategies is the high degree of pre-planning. This includes anchoring of experienced operating CEOs, bolt-on acquisition pipelines with mapped targets in select geographies, programmatic M&A execution backed by retained legal, diligence and financing support, and shared back-office infrastructure and centralised tech stacks.

Exit trends and liquidity pathways

Exit strategies are becoming more structured and less reliant on opportunistic deal sourcing. In what proved to be a pivotal year for exits, 2024 saw public markets emerging as credible and scalable liquidity avenues, fuelled by relative capital markets stability and faster regulatory clearances. In 2025, sponsors are no longer treating IPOs as opportunistic windows but as core components of value realisation strategy from the get-go. Key trends include the following.

• Pre-IPO Placements and Benchmarking – IPO-bound portfolio companies are leveraging pre-IPO rounds to anchor valuations, secure partial liquidity, and bring in strategic partners such as sovereigns or long-only global institutions that support the IPO narrative. In 2024 and 2025, several unicorns and late-stage growth companies raised substantial pre-IPO capital from marquee PE investors, sometimes at valuations exceeding their eventual IPO pricing, signalling both the depth and risk appetite of global capital for Indian stories.
• Post-Listing Retention – IPOs are no longer seen as binary exits even though there is now broad-based acceptance of offer-for-sale (OFS) structures (as opposed to primary fund-raises). Many sponsors are retaining significant stakes post IPO, riding continued growth alongside promoters and public investors. Discounts to staggered on-market lot sales are now generally nominal, easing pressure on funds to liquidate large stakes at the time of listing itself.

That said, secondary sales remain a powerful exit channel too. As many investments made in the 2017–20 cycle mature, sales to strategic players and clean sponsor-to-sponsor exits, notably in healthcare, financial services and consumer, are providing both liquidity and proof of institutional depth in the market. In the same vein, although still nascent in India, GP-led secondaries (including continuation funds and structured liquidity solutions) are gaining currency among marquee funds. Sponsors managing high-performing, long-duration assets are now actively exploring continuation vehicles to roll forward prized assets (either part-stake or wholly) offering liquidity to existing LPs, while maintaining rights and upside.

Conclusion

As India marches toward its USD5 trillion economy goal, PE will play an even greater role in scaling businesses, shaping markets and delivering long-term value. For funds looking to do business or deploy capital in India, the key is to focus on patient, value-oriented capital, robust due diligence (especially on governance and compliance), and local execution capability. Amid global uncertainty, India offers a relatively insulated growth story. Its demographic dividend, digital infrastructure and evolving capital ecosystem make it uniquely positioned for sustained outperformance, and private equity remains at the heart of that story.