India’s Mergers and Acquisitions (M&A) landscape in the first quarter of 2026 presented a compelling narrative: robust deal volumes persisted even as overall deal values saw a decline. This trend signals a significant strategic pivot by investors towards mid-market transactions, an uptick in outbound expansion by Indian companies, and a focused interest in the technology, energy, and consumer sectors. According to a Grant Thornton report, Q1 2026 recorded 710 deals, totaling approximately US$20 billion. This represents a 5 percent increase in deal volumes, marking one of the highest activity levels on record.
The divergence between increasing deal volume and decreasing deal value is not indicative of a market slowdown, but rather an evolution in how deals are structured. Investors are actively participating but are increasingly opting for smaller, more targeted transactions. While the absence of mega-deals contributes to the lower total value, the underlying market activity remains robust. This necessitates a re-evaluation of traditional market strength indicators, with deal count, sector distribution, and transaction size offering a more accurate reflection of the market’s direction.
Global economic uncertainties, including geopolitical tensions, fluctuating trade conditions, and currency volatility, continue to temper investor sentiment, leading to a reduced appetite for large-scale deals and a cautious approach to capital markets. However, India’s strong domestic economic growth, policy stability, and a vibrant consumption demand are proving attractive to both strategic and financial investors. Indian companies are actively engaging in consolidation and expansion, with this domestic resilience effectively counterbalancing global caution. Investors are adjusting their strategies rather than withdrawing from the market.
M&A remains a primary driver of deal-making, with 271 transactions recorded in Q1 2026, one of the highest quarterly volumes in recent years. Domestic transactions, particularly within the consumer, manufacturing, and healthcare sectors, continue to anchor deal activity, underscoring confidence in India’s long-term growth potential. Concurrently, outbound M&A reached a record high, with Indian companies executing 56 deals valued at approximately US$3.9 billion. These outbound deals are driven by a desire to acquire global capabilities, access new technologies, and enter new markets. In contrast, inbound deal values saw a decline, attributed to global uncertainty, with foreign investors favoring smaller investments.
Private equity and venture capital (PE/VC) activity remained strong, with 415 deals in Q1 2026. Despite a decrease in total deal values, largely due to fewer large transactions, investors are deploying capital with greater discipline. They are focusing on smaller, structured deals and prioritizing capital efficiency. The emergence of three new unicorns during the quarter further underscores the continued confidence in high-growth sectors like technology and digital infrastructure.
Sectoral analysis reveals that the retail and consumer sectors lead in deal volumes, followed by pharma and manufacturing, propelled by robust domestic demand. In terms of value, IT and ITeS dominate, with energy and media and entertainment also being significant contributors, attracting larger investments due to their scalability and growth potential. Technology continues to drive deal value, particularly in AI-related platforms and data infrastructure, while energy investments are concentrated on renewables and resource efficiency. The media and entertainment sector also saw a notable increase in value, partly due to a large sports-related transaction.
Looking ahead, India’s deal-making momentum is expected to remain positive, supported by strong domestic demand and active participation from both corporate and private equity players. While the risk appetite for large deals may remain moderate due to ongoing global uncertainty, mid-market deals are poised to continue driving activity. The technology, energy, and consumer markets are expected to attract consistent investment. Furthermore, outbound expansion by Indian companies is projected to increase, further solidifying India’s growing role in the international M&A landscape.
About the Author
