Private equity investment in India slumped 33% to $19.6bn in 2025, Bain & Company data reveals, as lofty valuations and economic uncertainty deter dealmaking. Once a top Asian destination for firms like Blackstone and KKR, India now sees investors exercising extreme caution.

Mounting pressures include U.S. tariffs, the Iran conflict hitting energy imports, and over $20bn in foreign equity outflows. The rupee faces pressure, and the government has doubled gold tariffs and urged austerity. Economists cut GDP forecasts, citing supply shocks.

Valuations for listed firms remain Asia's second-highest, while founders still seek 2021 price levels. About $15bn in dry powder sits idle for lack of well-valued targets. Global capital is also rotating toward AI, an area where India lags. Deployment remains selective despite strong fundamentals.