A missile strike in West Asia rarely stops a private equity (PE) deal in Mumbai. But it can reshape the questions investors ask before signing one.
From freight costs to tariff exposure, geopolitical developments that once sat at the margins of investment committees are now shaping how global and domestic funds deploy capital in India. The result is not a pullback in investment, industry executives say, but a growing emphasis on the R-factor: resilience.
India's private equity market entered 2026 with strong macroeconomic fundamentals, including moderating interest rates, resilient consumption and continued government spending, according to IVCA-Bain India Private Equity Report 2026.
Even so, investors say geopolitical risks have become a more prominent consideration in private equity decision-making. "Geopolitics used to be one line in a deal memo. Today it has a section of its own," Ankit Kedia, Founder and Lead Investor at Capital-A told ET Online.
Selective capital, not scarce capital
According to an IVCA-Bain report, private equity and venture capital (PE-VC) investments declined approximately 17%, hitting $36 billion in 2025. Over the year, traditional PE activity contracted around 33%, while VC and growth capital expanded roughly 18%, partially offsetting the PE decline.
The downward trend in PE investment volume is echoed in the Deloitte India supplement to the Asia Pacific Private Equity Almanac, which notes that while overall deal volumes moderated in FY25, investors concentrated capital into fewer but larger, higher-conviction transactions.
In FY25, deal volumes declined by 8%, however total transaction value increased by 23%.
"Uncertainty doesn't kill deals, it may slow them down and make everyone more selective. But funds are still deploying and good assets will always find buyers," Nidhi Killawala, Partner at Khaitan & Co. told ET Online.
However, India continued to account for around one-fifth of Asia-Pacific PE investments despite broader regional moderation, IVCA-Bain PE report said, indicating that investor interest remains intact even as dealmaking has become more measured.
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