A clear shift in investment patterns is emerging in India’s consumer sector, with investors choosing smaller, diversified bets over large deals. While overall funding declined in FY26, deal activity saw a strong rise, reflecting a change in how capital is being deployed.
Total funding in FY26 dropped to about $8.5 billion from $9.8 billion in the previous year. However, the number of deals increased significantly to 510 from 402, according to data from a research firm. Another dataset shows a similar trend, with funding in 2025 falling to $9 billion across 393 deals from $10.5 billion across 359 transactions in 2024. Notably, last year recorded the highest deal count in the post-pandemic period.
“It is a sign of maturity where companies are looking for adjacencies, sustainable business, operational discipline, rather than scale-driven aggressiveness,” said Tarun Arora, CEO of Zydus Wellness. He also pointed out that integration challenges are pushing companies towards more focused and practical deals.
Experts noted that the fall in total funding value is mainly due to the absence of mega deals and lower strategic activity. “I think the investor interest in the sector is still just as high as before, but the mega deal trend is missing for now,” said Nitin Gupta, partner, consumer products and retail, investment banking, EY.
He added that private equity investments and exits are driving deal volumes, even as large transactions remain limited due to weak inbound mergers and acquisitions and fewer cross-border deals. Companies are now focusing on bolt-on acquisitions and expanding portfolios, aiming to fill “white spaces” across categories, channels, and geographies instead of chasing scale alone.
This trend aligns with a shift in consumer startup funding as well. Early-stage investments have picked up after a slowdown, but with stricter filters and a stronger focus on profitability and sustainable growth. “The activity levels at pre-series A/series A continue to be strong. While mega deals are elusive, good companies are able to raise series B,” said Sumit Keshan, managing partner at Wipro Consumer Care Ventures. “Valuations are looking more moderate in the current environment.”
Overall, experts believe the sector is moving towards consolidation rather than aggressive expansion, even as growth ambitions remain intact.
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