India’s technology sector recorded 76 deals worth $3.5 billion in the July-September quarter of calendar year 2026, with aggregate deal value rising 38% quarter-on-quarter despite a 5% decline in transaction volumes, according to Grant Thornton Bharat’s Q3 CY26 Technology Dealtracker. The contrasting trends point to a market increasingly driven by large strategic acquisitions, while private investors adopt a more selective approach towards funding technology businesses.
Mergers and acquisitions (M&A) and private equity and venture capital (PE/VC) together accounted for 70 transactions worth $3.1 billion during the quarter. M&A emerged as the principal driver of deal value, offsetting a sharp contraction in private capital deployment.
Raja Lahiri, Partner and Technology Industry Leader at Grant Thornton Bharat, said, “Technology dealmaking is increasingly splitting into two distinct trends: strategic acquisitions remain strong, while investors are taking a more measured approach to growth capital. For technology businesses, this raises the bar on demonstrating clear paths to profitability and commercial returns. As AI reshapes the sector, the ability to turn new capabilities into tangible client outcomes and sustainable growth will be key to attracting investment.”
M&A surges on large-ticket acquisitions
Technology M&A recorded 25 transactions worth $2.8 billion in Q3 CY26, with deal value rising to nearly three times its Q2 level despite a decline in volumes. Outbound acquisitions contributed $1.8 billion across six transactions, led by Persistent Systems’ $1.4 billion acquisition of Nagarro SE. The transaction ranked as the third-largest outbound deal in the sector’s history.
Technology service providers accounted for 16 M&A transactions worth $2.8 billion, highlighting the concentration of deal value in strategic acquisitions. Meanwhile, startup M&A activity moderated to three transactions. Enterprise software and software-as-a-service (SaaS) also witnessed softer M&A activity, indicating that larger acquisitions, rather than broad-based dealmaking, underpinned the quarterly increase.
PE/VC funding contracts sharply
PE/VC activity recorded 45 deals worth $301 million, down from $1.5 billion in Q2 CY26. Despite the fall in capital deployment, early-stage investments, spanning pre-seed to Series A, represented nearly 79% of funding rounds, suggesting continued interest in emerging technology businesses.
Technology startups attracted 27 deals worth $125 million, while investments in technology service providers dropped to $77 million from $1.1 billion in the preceding quarter. In enterprise software and SaaS, deal volumes increased to 13, but disclosed deal value declined to $99 million, indicating greater selectivity in investment sizes and an emphasis on scalable business models.
IPOs and QIPs revive public-market funding
Public-market fundraising provided an additional source of capital during the quarter, with three initial public offerings (IPOs) and three qualified institutional placements (QIPs) collectively raising $398 million. This marked a revival after subdued activity in the previous quarter.
The latest figures underline a divergence in India’s technology investment landscape: strategic buyers continue to pursue acquisitions, while private investors increasingly scrutinise profitability, scalability and commercial returns. With artificial intelligence reshaping technology services and software businesses, the ability to translate new capabilities into measurable client outcomes is emerging as a critical factor in attracting capital.