India saw record flow of investments from private equity (PE) and venture capital (VC) firms in 2015, with the consumer technology sector receiving a major chunk of them.
The country witnessed investments worth $22.4 billion last year, up 47 percent from $15.2 billion in 2014, according to a report by Bain & Co India Pvt Ltd.
While investments in consumer technology went up 46 percent to $6.9 billion last year, real estate, banking, financial services, and insurance also attracted significant investments.
"India has the fundamentals — large population that is young with rising incomes, increasingly online and consuming more — that make it one of the most interesting countries to invest in participatory if you have a long-term investment horizon and appetite," Arpan Sheth, head of Bain and Co's PE consulting practice in India, told Mint.
Investment of $700 million in Flipkart by Tiger Global Management and Steadview Capital Management and a $635-million investment by Alibaba and SAIF Partners in Paytm were the top deals last year.
However, people have now become cautious over investments in e-commerce due to their expensive valuations.
"Currently, valuations of e-commerce businesses are high and there are concerns that the growth rate of these businesses does not match with the current valuations. There are expectations that the valuations will come down and hence investors are in the wait-and-watch mode," said Vikram Utamsingh, managing director at advisory firm Alvarez & Marsal India Pvt Ltd.
Last week, Morgan Stanley had reduced the value of Flipkart's share by 27 percent in a mutual fund managed by it, indicating that global investors now see India's largest e-commerce firm as overvalued.