India’s private credit market likely to stay buoyant over next two years

Private credit investments in India stood at $3.5 billion in the first half of 2026 as domestic funds expanded their role and mid-market deals dominated activity

PGurus Newsdesk

August 21, 2026

Real estate emerged as the leading sector as India’s private credit market recorded $3.5 billion in investments during the first half of 2026

Domestic funds and mid-market deals drive private credit activity

India’s private credit market is expected to remain buoyant over the next two years, supported by strong domestic fundamentals, growing demand for flexible financing and an evolving regulatory environment, according to an EY report.

The private credit market recorded investments of $3.5 billion in the first half of 2026, broadly in line with the second half of 2025. The market saw 102 transactions worth more than $10 million each during the six-month period, up from 87 such transactions in H2 2025.

The report noted that India’s private credit ecosystem remained resilient despite global macroeconomic challenges, including geopolitical tensions, commodity price volatility and uncertainty around trade and policy.

Strong domestic consumption, infrastructure spending, improving investment activity and a healthy banking sector continued to support the credit ecosystem, according to EY.

Real estate leads private credit activity

Real estate remained the biggest recipient of private credit in H1 2026, accounting for 35% of total deal value. Healthcare followed with 13%, while the Food & Beverage sector accounted for 12%, marking a significant increase from its share in the previous half-year.

Private credit funds continued to provide financing for real estate projects, refinancing, HoldCo funding and acquisitions, highlighting the growing role of alternative lenders beyond traditional bank financing.

Mid-market deals drive activity

Mid-market transactions continued to dominate private credit activity during the first half of the year.

Deals in the $10 million-$60 million range accounted for 87% of the total number of transactions and 61% of overall deal value. Meanwhile, transactions exceeding $120 million contributed 18% of deal value, compared with 27% in H2 2025.

The trend indicates that private credit activity is increasingly spread across a wider range of mid-sized borrowers and sectors, reflecting the growing maturity of the market.

Domestic funds gain ground

Indian private credit funds accounted for 74% of total deal value and around 79% of deal volume in H1 2026, pointing to deeper participation from domestic managers.

The growing role of local funds comes as businesses increasingly seek customised financing solutions for refinancing, acquisitions, expansion and other capital requirements.

Regulatory changes strengthen outlook

EY said recent regulatory developments could further support the private credit market. The Insolvency and Bankruptcy Code (IBC) Amendment Act, 2026 introduced measures aimed at speeding up insolvency proceedings, strengthening creditor protection and improving transaction certainty.

The report said these changes could strengthen India’s restructuring and special situations ecosystem and support the long-term development of alternative credit markets.

With demand for flexible financing expected to remain strong, market participants remain positive about the medium-term outlook for private credit in India. However, EY noted that competition within the private credit industry is also expected to intensify.

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