India’s technology sector is seeing a shift towards fewer but larger deals, with total deal value rising sharply even as volumes declined in the March quarter, according to Grant Thornton Bharat’s Dealtracker report. 

The sector recorded 68 deals worth $3.9 billion in Q1 2026, including IPO and QIP activity, marking the highest quarterly deal value since Q3 2022. This came despite an 8% sequential drop in deal volumes, highlighting a growing concentration of capital in high-value transactions. 

Excluding public market activity, there were 66 deals worth $3.4 billion, reflecting a 7% decline in volumes but a 39% increase in value over the previous quarter. On a year-on-year basis, volumes fell 26%, while deal value surged 208%, underlining a structural shift in capital deployment. 

“India’s technology deal landscape is undergoing a structural shift, with capital increasingly concentrated in fewer, high-conviction opportunities. AI, particularly generative AI, is becoming central to investment decisions, influencing both valuation frameworks and strategic priorities,” said Raja Lahiri, Partner and Technology Industry Leader at Grant Thornton Bharat.

He added, “We are seeing a clear move towards capability-led acquisitions, especially in AI, cloud, and digital engineering, as Indian companies strengthen their position as global consolidators. Going forward, dealmaking will be defined more by quality, scale, and long-term value creation rather than volume.”

Must read: How India's start-ups can outlast the funding slowdown 

M&A drives value surge

Mergers and acquisitions emerged as the primary driver of deal value during the quarter, with 21 transactions worth $2.6 billion, more than three times the value seen in the previous quarter. 

The spike was largely driven by a single marquee outbound deal, Coforge’s $2.4 billion acquisition of Encora Inc, which pushed average deal size to $122.3 million from $38.1 million in the previous quarter. 

Outbound deals dominated, contributing about $2.5 billion, or nearly 97% of total M&A value, signalling a strong push by Indian firms towards cross-border expansion and capability-led acquisitions. In contrast, domestic deals accounted for the bulk of volumes but contributed only around 2% of value. 

The report noted that this reflects a broader shift towards “strategic, outbound-led consolidation,” with Indian IT firms increasingly positioning themselves as global consolidators. 

Private equity turns cautious

Private equity and venture capital activity remained subdued, with 45 deals worth $848 million, marking a 49% drop in value sequentially. 

The decline was attributed to the absence of large-ticket investments, with activity skewed towards smaller deals. A single transaction, Neysa Networks’ $600 million fundraise, accounted for about 71% of total PE value, underscoring the concentration of capital in select opportunities. 

Despite this moderation, PE/VC continued to dominate volumes, contributing around 66% of overall deal activity, with sustained momentum in early- and mid-stage investments, particularly in AI and enterprise technology. 

Two-speed market across segments

The report highlights a divergence across segments, pointing to a “two-speed market” in the tech ecosystem. 

In start-ups, M&A activity rose to a five-quarter high with six deals, driven by acqui-hiring and IP-led capability buys, though deal values remained muted. PE/VC saw 29 deals worth $699 million, indicating strong early-stage momentum but continued caution in large growth funding. 

Technology services companies drove overall deal value, with 14 M&A deals contributing $2.6 billion, largely led by outbound transactions. Meanwhile, enterprise SaaS saw a sharp slowdown in M&A, with just one deal during the quarter, reflecting increased selectivity among buyers. 

AI reshapes dealmaking priorities

A key theme emerging from the report is the growing influence of artificial intelligence, particularly generative AI, in shaping deal activity and valuations. 

The report notes that assets with “credible AI capabilities” are commanding valuation premiums, while traditional models are facing heightened scrutiny. Investors are increasingly prioritising scalability, profitability, and the ability to integrate AI into core offerings. 

Overall, the sector appears to be transitioning from a volume-driven cycle to one defined by discipline and strategic intent.

“The next phase of dealmaking is likely to be defined not by volume, but by the quality, scale, and strategic intent of transactions,” Lahiri said.