Indian Startups In 2026: Trends & Predictions

2025 was the transition year. 2026 will be the rebalancing year. That’s Inc42’s thesis for the upcoming year, where we expect a greater degree of maturity when it comes to fundraising, public markets and key sectors such as deeptech, AI, consumer services, ecommerce and fintech.

The Indian startup ecosystem has already absorbed the correction of the past two years and the biggest testament to this was the fact that 2025 was a record-breaking year for startup listings.

More than 18 startups went public in 2025, and the cumulative market cap of listed new age tech companies is now close to $150 Bn. The next 12 months will build on these structural changes of 2025.

Broadly speaking, we will see selective capital deployment by investors, after a year or two of reserving dry powder. Founders and startup CEOs will prefer exit readiness over perpetual fundraising cycles as this distracts management from operational and profitability focus.

This is perhaps why execution depth will win over narrative-driven momentum, which has reigned supreme from 2021 till now. Operating leverage, unit economics flexibility and margin accretion will be the name of the game in 2026.

Here’s where Inc42 sees India’s tech and startup ecosystem heading in 2026.

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Indian Startups In 2026: Trends & Predictions

As per Inc42’s research, startup funding in 2026 will recover modestly to $11.5 Bn – $13.8 Bn, remaining structurally closer to 2019–20 levels than the 2021 peak. The bottom line here is that capital is available, but will be concentrated, gated, and domestically anchored.

What Changes In 2026

• While there will be some funding recovery thanks to new frontiers and the rise of deeptech,this will be without the exuberance seen in 2021-22. Funding stabilises, but growth-era behaviour is not expected to return as market leaders move towards improved profits and not just growth.
• As a result, patient and conviction capital will come into play. Investors will deploy fewer, larger cheques into fewer companies. Profitability will be the primary entry point at growth and late stage, if IPOs are not on the cards.
• Shift from risk-averse globally arbitraged capital to locally anchored, patient capital and domestic investor confidence will also stem from deploying capital selectively in startups with a path to profitability.

Profitability & Unit Economics Become The New Fundraising Filter

By 2026, profitability and unit economics are no longer optimisation goals, they are the price of entry for capital.

What Changes In 2026

• Inc42’s Annual Indian Startup Trends Report, 2025 shows that over one-third of Indian startups chose profitability and runway extension over fundraising in 2025, reframing capital discipline as a competitive advantage rather than a slowdown signal.
• The takeaway is that profitability is no longer limited to mature companies; even early and growth stage startups are building with EBITDA visibility as a baseline expectation.
• As revealed in our annual founder survey, more than 34% of startups did not attempt to raise capital; among those that did, founder bandwidth and low fundraising priority created the most friction, signalling a pivot from pitch cycles to operational focus.
• Market expansion and customer retention emerge as the primary growth levers, positioning revenue quality, not burn velocity, as the path to scale.

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M&A + IPOs: The New Paradigm For Exits 

Liquidity returns, but through structured exits, not endless private rounds. Founders move from fundraising optimisation to exit readiness.

Liquidity appetite is shifting toward secondaries, but founder adoption of secondary rounds remains limited, especially with IPOs on the table. The mismatch creates an information and access gap in India’s exit landscape, resulting in some friction, but the exit track record will only continue to improve in 2026.

IPOs On The Radar

• IPO pipeline will remain super active in 2026 and the next 12 months could see a new record in terms of listings in a calendar year. A whopping 48 startups are queued for IPOs over the next 18 months, and many might accelerate listing timelines given the current market conditions.
• Profitable, mid-market startups increasingly choose SME listings over Mainboard for faster exits
• The first half of 2026 will be dominated by listings of fintech startups and profitable platforms, while ecommerce, logistics and SaaS startups will eye the second half of the year for listings.

What Changes In 2026

• The M&A market will turn capability-led as acquirers prioritise IP, defensibility, AI stack and operating leverage; vertical SaaS (healthtech, retail SaaS, BFSI) leads acquisitions especially to boost AI capabilities.
• Edtech transition on the cards with BYJU’S assets sales expected to finally be closed. Plus, Unacademy has admitted that it’s in M&A talks. Two of the biggest brands in edtech could find new homes in 2026
• Secondary deals and transactions will move from fringe transactions to a recognised liquidity pathway for founders and early investors, alongside IPOs and M&As. The rise of India-focussed secondary funds deepens liquidity pools and normalises partial exits before public listings.
• IPOs will be the primary option for growth or late stage startups, while M&As will be the primary channels for capability expansion and strategic bets by listed companies and larger conglomerates.

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Execution And Unit Economics Define Sector Winners

Sector outcomes diverge sharply as capital, regulation and consumption patterns realign. The coming year will create clear winners and losers, not broad-based uplift. Consumption tailwinds will be on the side of startups as rising discretionary spend among top 200 Mn households benefits premium D2C, gaming, beauty and convenience.

But monetisation discipline remains essential, as demand alone will not support any cash burn or loss leader strategy.

GenZ and Tier II–III purchasing power will drive the next ecommerce cycle. Up to 35% of investors cite growing numbers of premium households as the primary factor, and 21% anticipate D2C growth to come from rising middle-income cohorts in Tier II–III cities, as per Inc42’s annual investor survey.

Consumption growth shifts outward from metros, but skews towards premium-first categories, reinforcing the need to shore up supply chains, pricing and fulfilment without diluting margins. This will result in some churn among D2C brands, especially with legacy retail companies eyeing M&As in this segment.

What Changes In 2026

Quick Commerce Trends

• 2026 is expected to be the final land-grab year for quick commerce giants. As per Inc42’s thesis, dark store density in top 8 cities will decide the winners in the QC race, especially as all three major players — Blinkit, Instamart and Zepto — are all cash-rich and hungry for market share.
• However, regulatory risk from labour and zoning laws will result in some headwinds for these companies in expansion mode. This could accelerate consolidation of smaller players or result in retreats from non-performing markets or cities.
• Analysts and founders told Inc42 that non-grocery margins will become crucial for companies especially if consolidation and mergers are limited. Private labels can become a factor for companies looking to drive margins instead of market share.

Gaming Startups

• The post real money gaming era will set in in 2026 as in-app monetisation models will come into  focus. Gaming platforms might look at subscription models to offset RMG revenue loss and could bundle in multiple games within one subscription in 2026.
• Game development and game studios will grow to new heights in 2026 as serious models take centre stage. AI will be a prominent factor, accelerating development timelines, while genre-focused studios will enjoy the advantage of scale in a global gaming market.

Electric Vehicles Forecast

• It’s expected to be a tough year for growth in the EV sector, especially if the semiconductor shortage has an implication on the Indian market. In lieu of hyper-growth, we can expect maturity as commercial fleets, logistics, tractors and buses drive EV adoption.
• Battery services and swapping will go mainstream to extend lifecycles of existing EV stock in the market.
• New launches will come in the year, but there could be a muted atmosphere for new adoption. Consolidation will be driven by those companies with supply-chain depth and clean customer grievance track records and governance.

Fintech 3.0

• Payments fight will go global as the Indian domestic market sees some plateauing in terms of UPI transactions. Headwinds such as potential MDR for UPI could force more players to eye international waters for growth.
• Merchant services will mature and players will converge into similar models to cater to the millions of merchants in India
• Verticalisation of lending will deepen, especially as co-lending scales and risk models turn to AI-based segmentation. AI-led collections and compliance will form a critical moat for lenders and lending platforms
• Diversification drive continues for discount brokers — no big companies can be created purely on trading and discount brokerage. Personal wealth management, HNI-focussed services will grow in stature.

D2C & Retail In 2026

• While sales growth has been the north star till 2025, customer lifetime value obsession will replace growth vanity in the coming year. More and more brands will want customers to re-engage faster and the competition will turn for a higher share of a customer’s wallet.
• Owned-channel premium will come into play for pricing in key D2C categories. This is different from premiumisation, and will manifest itself in higher delivery charges for faster fulfilment and other such tactics.
• Omnichannel brands will continue to face stern EBITDA discipline questions. With inventory models settling in among quick commerce players, retail brands have to adjust their distribution and channel strategies for the new reality, potentially resulting in some churn.

AI Enters Its Shakeout Phase

AI moves from experimentation to accountability. In 2026, defensible AI businesses will separate from surface-level wrappers.

What Changes In 2026

• Thin LLM wrappers that have managed to float along will die out without defensible IP, data moats, or distribution fail or get absorbed.
• Agentic AI will go to the next level, as AI moves from assistant to autonomous workflow layer across support, risk, and collections.
• Small and micro language models will shine, particularly for enterprise and niche research use cases. Precision, latency, compliance, and cost efficiency will beat brute-scale general models in 2026. A sign of growing maturity in the foundational layer in AI.
• Voice and multimodal AI will continue to mature, and more and more apps will have some form of AI companion embedded inside. Real-time voice and multimodal systems become enterprise-grade interfaces particularly for banking, telecom and other sectors with high volume of customer support calls
• AI infrastructure blooms backed by IndiaAI mission’s principles. AI financial operations, security-first design, and hybrid (cloud–edge–on-prem) stacks become non-negotiable, especially from a cybersecurity standpoint as threats also mature in the age of AI.
• Spend discipline will harden among large players, as internal AI budget priorities shift from experimentation to adoption. Scaled deployment where there is a P&L impact will be preferred. While many startups will “use AI,” those who excel at deep adoption in operations to influence outcomes will emerge as winners.

Deeptech & Semiconductor Sovereignty Become Strategic

Deeptech will continue to move from future optionality to strategic necessity in 2026, as capital follows sovereignty, security, and industrial capability. Semiconductors stand out as the clearest signal.

What Changes In 2026

• Defence tech, semiconductors, climate tech, and industrial automation attract early stage capital and M&A interest despite longer gestation cycles, thanks to growing comfort with IP-led or infrastructure-adjacent bets.
• PLI and design-linked incentives (DLI) translate into real startup formation, particularly in fabless chip design, embedded systems, and automotive-grade semiconductors.
• Rising demand from automotive electronics, EVs, consumer devices, and industrial automation drives local chip consumption, reducing import dependence at the margin.
• Deeptech exits governed by strategic acquisitions rather than IPOs with a few exceptions like Tonbo Imaging
• Talent becomes a bottleneck. Shortage of experienced chip design and systems engineers emerges as the primary constraint, ahead of capital or policy.

Talent Migration & AI-First Teams

AI reshapes not just products, but where talent works and how companies are formed. India’s AI talent pool will continue to be an advantage, but retention and deployment will prove more crucial to outcomes in 2026.

Critically, close to 3,000 Global Capability Centres (GCC) now operate in India, the largest base globally. 1,20,000+ AI professionals across 185+ AI/ML-focused GCC hubs. These will be one of the biggest advantages for India in the age of AI.

Just like the IT services boom created the bedrock for startups, the GCC wave is likely to feed India’s AI economy for years to come.

What Changes In 2026

• As multinationals shift core AI and R&D mandates to India, GCCs evolve into full-stack AI engineering hubs rather than support centres.
• Up to 15–20 AI-native and deeptech startups are likely to emerge in 2026 as GCC spin-outs, led by globally trained operators.
• Senior operators will increasingly leave incumbents for AI-native startups.
• Rise of micro-ventures and lean teams: Smaller AI-augmented teams replace large organisations; equity and outcome-linked roles gain prominence over expensive hiring.

 

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Inc42’s one-of-its-kind Annual Indian Startup Trends Report for 2025 highlights just why there’s a bullishness in the air for Indian tech and startups in 2026.

Key indicators like funding for deeptech startups, foreign direct investment (FDI) inflow, a record year for public listings of startups and the rise of new value-creators in AI-native segments are on the side of the Indian tech economy.

Of course, macroeconomic challenges, geopolitical complications can potentially derail the best laid plans, but startups and tech giants earned plenty of experience dealing with these in 2025. Stability and a return to maturity were the softer themes of 2025, but in 2026, these softer aspects will emerge stronger as we hurtle further into the world of AI.