India's Mid-Market Sees Domestic Credit Surge

In the first half of 2026, domestic funds captured a dominant share of India's private credit market, accounting for approximately 74% of deal value and 79% of deal volume. This represents a notable shift, with the share of global funds decreasing significantly. Local private credit managers are leveraging advantages such as established relationships, access to rupee funding, and quicker decision-making processes.

These factors provide domestic funds a competitive edge, particularly in mid-market transactions. While global funds still maintain a stronghold in larger and more intricate deals where substantial capital deployment is required, the growth of domestic capital signifies a maturing Indian credit market. This trend is observed across various Indian private credit firms actively raising substantial capital for their vehicles.

Experts note that this is not a withdrawal of global capital but rather the emergence of robust domestic funding. Global lenders are increasingly finding smaller mid-market deals less attractive due to underwriting costs, while currency hedging expenses can also impact their competitiveness. Consequently, domestic managers are well-positioned to finance the growth and refinancing needs of companies in this segment.