India’s consumption story holds appeal, but investors are spending less

Mumbai: India's consumer and retail deal value fell 58% year-on-year to $948 million in the September quarter, as fewer large transactions weighed on investment, with just two deals exceeding $100 million compared with five a year earlier, according to a Grant Thornton Bharat report.

In the first nine months of 2026, mergers and acquisitions (M&As) and private equity and venture capital (PE/VC) activity in the segment totalled 353 deals worth $3.26 billion, down 6% in volume and 53% in value from a year ago.

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The decline suggests that investors are becoming more cautious, favouring brands with a clear proposition and path to profitability, rather than aggressive expansion. While dealmaking continued across consumer categories, fewer large deals and smaller funding rounds pulled down overall values.

"India's consumption story continues to attract investor interest, but capital is increasingly directed towards businesses with differentiated brands, strong category positioning and the ability to scale profitably," said Naveen Malpani, partner and consumer, retail and e-commerce industry leader at Grant Thornton Bharat.

PE/VC accounted for 84 of the quarter's 113 deals, worth $719 million, making it the largest contributor to dealmaking. While deal volume increased 11% quarter-on-quarter, investment value fell 3%, pointing to continued interest in consumer businesses but more measured capital deployment.

"Strong private equity activity relative to strategic M&A suggests that investors continue to see significant headroom for consumer businesses to expand market share, strengthen brands and build category leadership," said Malpani.

Personal care emerged as a bright spot, with investment value surging sixfold sequentially as investors backed premium beauty, wellness and direct-to-consumer brands. Jewellery, apparel and lifestyle also attracted interest across acquisitions, private investments and public markets, on the back of ongoing premiumisation trends.

The festive and wedding season is expected to help these sectors maintain this trajectory, the report said.

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Public markets provided another source of capital, with initial public offerings and qualified institutional placements accounting for 51% of the quarter's overall deal value of $1.92 billion. This exceeded the combined value of M&A and PE/VC transactions, which stood at $948 million.

"The growing contribution of public markets highlights the expanding funding options available to established consumer businesses. As demand patterns evolve, the ability to build lasting consumer relationships and sustain growth will be critical to creating long-term value," Malpani said.

The demand outlook, however, may prove to become even more uneven, according to him, as weather-related disruptions and the potential impact of El Nino on agricultural output and rural incomes weigh on consumption in some categories.