India's tech sector deal value jumps 43% to $3.9 billion in Q1 2026

The Indian technology landscape is experiencing a transformative trend, characterized by a marked increase in the value of deals, even as the number of transactions has declined. According to Grant Thornton Bharat's latest Dealtracker report, the sector recorded 68 deals worth a staggering $3.9 billion in the first quarter of 2026. This figure represents the highest quarterly deal value since Q3 2022, despite an 8% drop in deal volumes. Excluding public market activities, 66 deals accounted for $3.4 billion, reflecting a 7% decrease in volume but an impressive 39% rise in value compared to the previous quarter. When viewed year-on-year, volumes have fallen by 26%, while deal value has skyrocketed by 208%, indicating a significant shift in how capital is deployed within the sector. Raja Lahiri, Partner and Technology Industry Leader at Grant Thornton Bharat, commented on this trend, stating, "India's technology deal landscape is undergoing a structural shift, with capital increasingly concentrated in fewer, high-conviction opportunities. The rise of AI, especially generative AI, is becoming pivotal in shaping investment decisions and strategic priorities." Lahiri further noted that there is a clear trend towards capability-led acquisitions, particularly in areas like AI, cloud services, and digital engineering. Indian firms are positioning themselves as global consolidators, with future dealmaking focusing on quality, scale, and long-term value rather than sheer volume. Mergers and acquisitions were the primary contributors to the deal value this quarter, with 21 transactions totaling $2.6 billion—over three times the value from the previous quarter. A standout deal was Coforge’s $2.4 billion acquisition of Encora Inc, which significantly increased the average deal size from $38.1 million to $122.3 million. Outbound deals were particularly dominant, making up nearly 97% of total M&A value, highlighting a strong trend towards international expansion. On the other hand, private equity and venture capital activities experienced a slowdown, with 45 deals worth $848 million, representing a 49% drop in value from the previous quarter. This decline was attributed to a lack of large investments, with smaller deals becoming more prevalent. Notably, Neysa Networks’ $600 million fundraise represented about 71% of total private equity value, emphasizing the concentration of capital within select opportunities. The report also pointed out a divergence in market dynamics, revealing a "two-speed market" within the tech ecosystem. While M&A activity among start-ups reached a five-quarter high, driven by acqui-hiring and IP-led acquisitions, the overall deal values remained subdued. Meanwhile, technology services firms led in overall deal value, primarily due to outbound transactions, while enterprise SaaS saw a notable slowdown in M&A activity. Artificial intelligence is increasingly influencing deal-making priorities, with assets boasting strong AI capabilities attracting higher valuations. As traditional models face increased scrutiny, investors are prioritizing scalability and profitability, especially in the context of AI integration into core business functions. Overall, the sector is transitioning from a volume-driven approach to one characterized by strategic intent and disciplined investment.