As a card-carrying member of the BRIC group of emerging markets, India is expected to serve as a key growth engine of the global economy. For many industries, this remains the case. For the private equity industry, not so much.

For one, Indian private equity deals accounted for only 2% of global transaction value in 2009, according to ARC Financial Services. In addition, dealmaking in India collapsed last year like it did it most other developing, and developed, markets. Deal value, at US$3.4bn, was down nearly 70% on the year before. The average deal size, US$17.5m, was half of what it was in 2008.

Of course, size isn’t everything. With banking penetration low, microfinance institutions in India have plenty of scope for growth (from a deliberately low base). Some 10% of private equity deal volume was in this sector last year, with more to come in 2010, ARC predicts.