India's M&A deal volume fell by roughly 20% during the first seven months of 2026 relative to the same period in 2025, a slightly steeper drop than the global average of about 18%. (See Exhibit 1.)
Analysis of the transactions, however, suggests that the pullback may reflect discipline and selectivity rather than diminished appetite. Rich public-market valuations have widened the gap between what buyers will pay and what sellers expect to receive in an environment of tariff- and war-related uncertainty and foreign exchange depreciation. These factors may be encouraging dealmakers to adopt a wait-and-see stance ahead of greater policy clarity, nudging acquirers toward fewer, more material transactions or to longer-term bets that are less likely to be affected by short-term macro-uncertainty.
Thus, while fewer transactions closed, those that did were markedly larger and potentially more strategically weighted. As a result, overall deal value held steady (–2% for India, year to date).
Despite the decline in transactions, India’s deal volume remained well above pre-pandemic levels. In contrast, activity in the global market has drifted back toward where it stood before COVID-19. In other words, India’s decline in volume represented a moderation from an elevated base, not a reversion to the mean.
Further evidence suggests that declining activity was a response to macro-uncertainty and valuations rather than a sign of limited availability of capital or a change in sponsor sentiment. Deal volume across both archetypes of investors (financial and strategic) declined at similar rates (20% to 25%), even as deal value held steady, rising by 25% to 30% for financial sponsors and slipping only about 6% for strategics. (See Exhibit 2.) In addition, dry-powder levels for financial sponsors continued to trend close to historical highs (more than $20 billion for India-focused funds, according to Preqin).
Capital markets seem to have recognized increased prudence in the Indian M&A market, as reactions following M&A events were more positive and more sustained than in prior years. Median increases in relative total shareholder return and excess share price for public domestic companies engaging in M&A exceeded comparable metrics for 2024 and 2025.
The combination of falling M&A volume and a market where investors are rewarding more considered bets has led corporate leaders and dealmakers to reassess their medium-term M&A agendas. They are also examining the timing of their transactions and markers for value creation, asking the following questions:
- Is it prudent for us to pause on M&A until market sentiment rebounds?
- How can we hedge against short-term adverse sentiment?
- Where are the pockets of value in the M&A market? Which leading indicators can help us identify them?
- In our target selection, what distinguishes value-accretive transactions from value-destructive ones?
Material Capability Additions over Tactical Tuck-ins
In the first seven months of 2026, acquirers doubled down on bigger bets. Deals valued at over $1 billion accounted for a higher proportion of total deal value in 2026 than in prior years (roughly 14 percentage points more than in 2025). (See Exhibit 4.) Deal volume was more resilient for large transactions (those greater than $100 million), in particular, than for the broader market, yielding 45 deals in 2026 year to date compared to 51 in 2025 and 37 in 2024 over the same period.
Two acquisition rationales help account for this activity:
- Build-out of Scaled Platforms. This trend is evident in the health-care provider roll-ups involving ASG and Neuberg Diagnostics, and in quick-service restaurant and consumer brand consolidation, as seen in the Devyani and Sapphire combination.
- Buying Capability That Is Already Mature and at Scale. The clearest instances of this rationale involved IT-enabled services players extending their offering footprint (as with KPIT in cybersecurity with Cymotive) and biopharma players expanding their drug portfolio, as was the case with Gujarat Themis’s acquisition of MicroBiopharm Japan and Zydus’s acquisition of Assertio Holdings.
Very large transactions (deals worth $500 million to $1 billion and deals exceeding $1 billion) have accounted for the highest percentage of total transaction value (about 59%) since 2024. This is due to some significant transformational deals made by financial sponsors in emerging sectors, such as the Blackstone acquisition of Neysa (an Indian AI-Infra player) and the deal for RCB (in sports and media) by a consortium of buyers.
The contraction in deal volume was primarily concentrated in smaller deals, especially those valued at less than $1 million; these accounted for about half of the total decline in transaction volume from 2025 to 2026 (where deal sizes were available), a number vastly disproportionate to the category’s contribution to total deal volume. This trend signaled investors’ increased caution toward prospective deals that failed to move the needle or involved less proven or scaled segments.
The shift toward larger transactions amid a drop in total transaction volume mirrors a broader global pattern in which well-capitalized buyers are pursuing scale and transformation, deploying capital into fewer but larger tickets, while valuation gaps and macroeconomic uncertainty constrain smaller and midsize deals.
Internationalization of the M&A Shopping Basket
Outbound transactions—deals in which Indian strategic buyers acquired targets outside India—were an emergent theme in 2026, and the $3.8 billion increase in outbound deal value from 2025 to 2026 lifted total deal value at a time when domestic and inbound deals saw declines of $1.6 billion and $3.7 billion, respectively. (See Exhibit 5.)
Three motives propel outbound deals by strategic buyers. The first is the internationalization of supply chains in sectors where Indian companies already compete globally, as in Sun Pharma’s acquisition of Organon in biopharma. The second is the pursuit of order books and business development capacity in more established markets, as seen in LTM’s purchase of Randstad and Mphasis’s acquisition of Theory and Practice Business Intelligence. The third and arguably most consequential is the acquisition of capabilities that cannot readily be sourced at home, most notably AI-enabled IT services (as in Coforge’s acquisition of Encora and Infosys’s deals for Versent and Stratus).
Mirroring Global Trends
Alongside the influence of local dynamics in 2026, several themes shaping global capital flows reverberated in India’s M&A market.
Within technology, three themes stood out:
- Software and SaaS remained under pressure, with no recovery yet from the recent decline outside a few large transactions.
- IT services buyers rotated out of business process outsourcing, cybersecurity, and data and analytics, and into verticalized AI capability, choosing to buy rather than build.
- Indian semiconductor players saw initial signs of interest, carried over from global sponsor appetite for the sector, as seen with Vayavya Labs.
Beyond technology, two other themes were noteworthy:
- Beauty, personal care, and lifestyle brands reversed their deal volume trajectory in India with an upswing in volume that matched the pattern in their segments globally.
- Infrastructure-led sectors turned cyclical, with energy and transport both cooling relative to their activity in 2025.
The Road Ahead
India’s 2026 M&A market is a study in selectivity. Buyers are making fewer but bigger deals, concentrating capital where conviction runs highest.
This pattern echoes the wider global dynamic, in which advantage lies with those that can act decisively at scale, bring clear strategic logic to every transaction, and target long-term advantage rather than short-term momentum.
Five targeted leadership directives can help an organization position itself optimally for the next wave of M&A activity:
- Maintain an always-on M&A engine. Capital has not left India. Buyers that continue to screen through the dip in volume will be prepared to act when assets are contested.
- Prioritize deals based on belief in their long-term value, to hedge against dilution of short-term earnings per share. Mature assets with a clear medium-term thesis are best able to survive a macro repricing.
- Widen the aperture of M&A scans beyond domestic targets to include international opportunities. Global assets are demonstrably within reach, and successful examples provide a template.
- Track global peers closely, including those that are not direct competitors. This is a simple way to sharpen a dealmaker’s domestic M&A thesis in an environment where the Indian M&A market moves in lockstep with global peers.
- As deal sizes grow, value is preserved or destroyed after close. A tested integration playbook can make the difference between those two outcomes.
