PE-VC Trends: Growth Signals in Indian Markets
Indian private equity and venture capital (PE-VC) investments eased up to about US$ 39 bn in 2023, which reflected a global trend, according to a report by Bain & Company. Traditional sectors like manufacturing, healthcare, and energy showed resilience, capturing around 75 percent of investments in 2023, an increase from 60 percent in 2022. The manufacturing sector attracted around US$ 2 bn with a CAGR growth rate of 20 percent from 2021 to 2023 due to supply chain diversification and government initiatives.
With electric vehicle (EV) penetration in India expected to reach 40 percent by 2030, original equipment manufacturers (OEMs) led over 70 percent of deal value (in 2023), including large investments in companies like Ola Electric and Ather Energy. Packaging also saw significant deals, particularly in Polyplex Corporation Ltd and Tufropes, which generated 70 percent of sales from exports. Gustaf Ericson, Associate Partner, Bain & Company, highlighted that advanced manufacturing is poised for increased deal activity driven by China-plus-one strategies and government initiatives.
Looking ahead, PE-VC dealmaking in the country is expected to remain tempered in 2024 with global macroeconomic stabilization. However, traditional sectors like advanced manufacturing are likely to attract significant investments due to positive fundamentals and supportive policies.
The EV market, especially OEMs and charging infrastructure, is expected to see strong deal activity. Additionally, the packaging and electronics production sectors are anticipated to experience strong growth, driven by increased demand and favorable conditions for export-oriented Indian manufacturers.