India's Private Markets: What Global LPs Actually Think (McKinsey - IVCA)

March 2026 | Based on McKinsey x IVCA LP Survey, November 2025

India has quietly become the most attractive private market destination in Asia-Pacific. In a survey of more than 50 global limited partners, 31% ranked India first and 76% placed it within their top three choices across the region. That is a meaningful shift from just a decade ago, driven in large part by China's contraction. India's share of Asia-Pacific PE and VC deployment has grown from around 12% between 2015 and 2019 to about 21% from 2020 to 2024.

The headline numbers back the sentiment. PE and VC deal activity expanded 1.6-fold to $207 billion between 2016-20 and 2021-25, while exits more than doubled to around $120 billion. Private capital as a share of GDP has more than doubled in the past decade, reaching 1.42% in 2025.

Two types of LP, two readings of the same story

The survey reveals a clear split between high allocators, who view India as a complex but scalable opportunity, and moderate allocators, who approach it with considerably more caution. Both groups broadly agree on India's strengths: political and economic stability, strong entrepreneurial talent, and domestic consumption as a structural driver. Where they diverge is on governance quality, regulatory consistency, and foreign investment policy. High allocators view exit potential, availability of quality targets, and depth of capital markets as relative strengths, while moderate allocators score these factors lower and in some cases weaker than other markets.

On manager selection, the difference is just as sharp. High allocators prioritise deal pipeline quality and risk-adjusted IRR. Moderate allocators focus on a longer checklist including exit record measured by DPI, governance and disclosures, and management fees.

Where capital is going

Sector concentration remains pronounced. Almost three-quarters of PE capital in India was concentrated across five sectors from 2021 to 2025: technology (29%), financial services (15%), IT and IT services (13%), pharmaceuticals and healthcare (10%), and consumer goods (6%). LP preferences show no sign of broadening beyond this core, with pharma, new technology, and financial services dominating across buyout, growth, and venture strategies alike.

On strategy, buyout and growth approaches are most preferred over the next five years, scoring 7.8 and 7.7 respectively on a ten-point scale, with venture at 6.4 and seed at 5.3. Control-oriented buyout strategies are particularly appealing for their influence over exit timing, which directly addresses the exit risk concern that moderates keep raising.

Co-investment has become a significant part of the picture. Around 60% of surveyed LPs have participated in co-investments in India, and 54% of those reported outperformance relative to underlying fund investments, with another 42% reporting performance on par with fund investments.

India-dedicated GPs gaining ground

Appetite for India-dedicated fund managers is building. More than 50% of LPs surveyed plan to increase their allocation to India-dedicated funds, with just 5% expecting a reduction. On fund size, the $500 million to $1 billion range is most preferred, reflecting LP views on capital absorption potential. Domestic GPs still represent only around 15% of total PE deployment, a fraction of Korea's 62%, though that share has grown from 10% to 15% in recent years.

What needs fixing

Despite the optimism, structural issues remain. India's GP cohort ranks modestly against other markets on the metrics that matter most to LPs, including performance record (rated 5.4/10), exit record (4.9/10), and quality of investment teams (5.1/10). Currency risk, a complicated tax regime, capital control friction, and visa constraints are cited consistently across both allocator types.

The policy agenda implied by the survey is fairly specific: LPs highlight the need for greater clarity around valuation norms and tax treatment including carried interest taxation, simplifying approval processes for cross-border transactions, and enabling longer-duration fund structures with periodic liquidity windows.

Beyond PE and VC, private credit is drawing interest. About $36 billion was deployed in India's private credit market from 2020 to 2024, driven by demand for bespoke financing, improved creditor resolution frameworks, and persistent funding gaps for mid-market enterprises.

The bottom line

India's private market story is real and increasingly institutionalised. But it remains narrow in terms of sector spread, GP concentration, and capital depth relative to the size of the economy. The six largest GPs accounted for 64% of the total $13.68 billion raised between 2022 and 2024, up from 59% from 2016 to 2018. The LPs who have leaned in know how to navigate that. The ones still on the fence are waiting for the structural improvements that would make the market more legible and liquid at scale.

Source: McKinsey & Company / IVCA LP Survey, November 2025. Published March 11, 2026.

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