India’s consumer sector sees funding dip but deal activity surges in FY26

Mumbai: India’s consumer sector is seeing a change in investor behaviour. Overall investment in the sector declined in FY26 compared with the previous year, as investors moved away from big bets to more diversified, smaller investments, according to some experts and data from research firms.

In FY26, total funding fell to about $8.5 billion from $9.8 billion a year earlier. However, deal volume rose sharply to 510 transactions from 402, according to Grant Thornton Bharat Consumer data, signalling a shift in capital deployment strategies. Data from EY shows a similar pattern–funding in 2025 declined to $9 billion across 393 deals from $10.5 billion across 359 transactions in 2024.

Both data sets were exclusively shared with ET. To be sure, the number of deals last year was the highest in the post-pandemic period. “It is a sign of maturity where companies are looking for adjacencies, sustainable business, operational discipline, rather than scale-driven aggressiveness,” said Tarun Arora, CEO of , adding that integration challenges are also pushing firms towards more fit-for-purpose deals.

The decline seen in funding value was largely due to the absence of mega deals and muted strategic activity, said some experts. “I think the investor interest in the sector is still just as high as before, but the mega deal trend is missing for now,” said Nitin Gupta, partner, consumer products and retail, investment banking, EY.

He said private equity-led investments and exits are driving volumes even as large-ticket transactions remain limited amid weak inbound mergers and acquisitions (M&As) and fewer cross-border deals. As a result, dealmaking is increasingly happening around bolt-on acquisitions and portfolio expansion, with companies focusing on filling “white spaces” across categories, channels and geographies rather than just pursuing scale, according to Gupta.

This shift also coincided with a recalibration in . After a prolonged slowdown, early-stage activity has picked up, though with tighter filters and a sharper focus on profitability and sustainable growth. “The activity levels at pre-series A/series A continue to be strong. While mega deals are elusive, good companies are able to raise series B,” said Sumit Keshan, managing partner at Consumer Care Ventures. “Valuations are looking more moderate in the current environment.”

The broader shift, experts said, suggests a market in consolidation mode rather than aggressive expansion, though growth ambitions remain intact.