India’s private markets: The global limited partner view

India has emerged as a primary beneficiary of capital reallocation within Asia–Pacific's private markets, reversing years of regional contraction. According to McKinsey & Company's "India's private markets: The global limited partner view," investment activity in private equity and venture capital deals reached $207 billion during 2021–25, representing a 1.6-fold increase from the $129 billion deployed in 2016–20. Exit activity during the same period more than doubled to approximately $120 billion, demonstrating not only capital inflow but also improved portfolio maturation and return realization. This performance trajectory reflects India's growing appeal amid geopolitical shifts, supply chain reorientation, and China's economic deceleration—dynamics that have redirected global LP attention toward the Indian subcontinent.

Global institutional investors have responded decisively to India's market positioning. Private markets now account for approximately 64% of total LP allocations to India, and survey respondents rank India as the top investment destination across the Asia–Pacific region. This ranking shift underscores a fundamental recalibration of regional capital allocation patterns, with India displacing traditional competitors in the minds of sophisticated institutional capital providers.

However, structural imbalances threaten to constrain India's long-term private markets development. While fundraising by domestic private equity firms has increased in absolute terms, concentration among top-tier managers has deepened. The six largest general partners accounted for 64% of the $13.68 billion raised between 2022–24, an increase from 59% during 2016–18. This winner-take-all dynamic leaves smaller and emerging fund managers with limited access to capital, potentially stifling innovation and sector diversification. Additionally, private-capital intensity relative to GDP has stagnated, indicating that deployment growth has not kept pace with India's overall economic expansion. Capital allocation remains heavily concentrated in a limited set of sectors, while industries critical to India's long-term growth agenda—including infrastructure, healthcare, and technology enablement across tier-2 and tier-3 cities—receive disproportionately limited private-market investment.

McKinsey's research, based on surveys of more than 50 global LPs, identifies these structural constraints as both challenges and opportunities. Addressing capital concentration, expanding sector diversification, and creating pathways for emerging fund managers could unlock additional investable opportunities and deepen India's appeal to global institutional capital. The findings suggest that while India has successfully attracted regional capital flows, realizing its full potential as a private markets destination requires deliberate structural reforms to broaden both the depth and width of the investment ecosystem.