India’s private credit market is entering a new phase, with domestic funds gaining a stronger position as borrowers increasingly seek alternative financing for refinancing, acquisitions, growth capital and special situations.
Around US$3.5 billion was deployed across more than 100 transactions above US$10 million in H1 2026, according to an EY report. Deal value remained broadly stable from US$3.4 billion in H2 2025, but the market is shifting towards mid-sized opportunities. Domestic funds accounted for 74% of deal value and nearly 79% of deal volume.
Transactions between US$10 million and US$60 million made up 61% of total deal value, up from 51% in the previous half. Deals above US$120 million fell to 18% from 27%.
Real estate remained the largest sector at 35% of deal value. However, food and beverage rose sharply to 12% from 1%, bringing it close to healthcare at 13%. Infrastructure and other asset-heavy sectors are also expected to gain importance.
Large deals continued to attract global funds. Kalpataru Properties raised US$176 million, HyFun Foods Group secured US$156 million, GMR Group raised US$150 million, Manipal Group raised US$124 million and Inspira Group’s Lenexis Foodworks secured US$113 million.
Investor sentiment remains positive. Nearly 73% of respondents in the June 2026 EY Private Credit Pulse Survey expect activity to stay strong over the next 1 to 2 years, driven by stress situations, capital expenditure and M&A financing.
Return expectations remain high, with 33% targeting IRRs of 12% to 18% and 67% seeking returns above 18%. This could keep lenders focused on disciplined underwriting as competition increases.
Global geopolitical tensions and market volatility remain risks, although India’s domestic resilience and the RBI’s 6.6% FY27 GDP growth projection offer support. Headline CPI inflation rose from 3.4% in March to 3.5% in April and 3.9% in May 2026.
Real estate remains the sector with the highest perceived default risk, followed by roads, energy and renewables, metals and manufacturing. AI is also expected to support data analysis, underwriting and portfolio monitoring.
Over the next 2 to 3 years, private credit could become a broader institutional funding channel, with global funds targeting large transactions and domestic capital increasingly serving India’s growing mid-market.
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