India Private Credit Moves Towards Mid Market Funding

India’s private credit market is moving towards a broader base of mid-sized transactions, with deals between US$10 million and US$60 million accounting for 61% of total deal value in the first half of 2026. The shift points to changing financing needs for businesses and real estate projects, while giving domestic lenders a larger role in capital deployment.

Private credit investments reached US$3.5 billion across 102 transactions above US$10 million during January-June, broadly matching the US$3.4 billion recorded in the previous six months. However, the composition of transactions changed significantly. Mid-market deals rose from 51% of value in the second half of 2025, while transactions above US$120 million fell to 18% from 27%. For borrowers, the development matters because private credit can provide financing where conventional bank funding may not fully meet the timing, structure or risk profile of a project. Refinancing, acquisition funding, holding-company financing and structured capital remained important sources of demand during the period. Domestic funds accounted for 74% of private credit value and about 79% of transaction volume. The growing local presence could make the market more responsive to Indian companies seeking relatively specialised forms of debt, particularly in the mid-market.

Real estate remained the largest recipient, taking 35% of total private credit value. Healthcare accounted for 13%, while food and beverage reached 12%, a sharp increase from around 1% in the previous half-year. The real estate concentration also raises a risk question for cities. The sector was identified by investors as having the highest perceived default risk, ahead of roads, energy and renewables, metals and manufacturing. Strong funding flows into property therefore do not automatically translate into better urban outcomes. The quality of projects, underlying demand, construction progress and long-term infrastructure capacity remain important safeguards. For urban markets, this distinction is significant. Private credit can support housing, commercial development and infrastructure-linked projects, but rapid access to capital can also amplify exposure to poorly planned or financially stressed developments. Stronger scrutiny of project viability and repayment capacity is therefore important as funding expands.

The next phase could see infrastructure and other asset-heavy sectors attract more private credit. Global funds are expected to remain active in larger transactions, while domestic investors may increasingly target mid-sized opportunities. EY’s June survey found that nearly 73% of private credit investors expected market activity to remain strong over the following one to two years. For cities and citizens, the key test will be whether this expanding pool of private capital supports financially sound, infrastructure-ready and economically productive development rather than simply increasing the pace of construction.

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India Private Credit Moves Towards Mid Market Funding