India’s mergers and acquisitions (M&A) activity cooled in the second quarter of 2025-26 (Q2FY26), with deal value falling to $26.26 billion from $29.04 billion a year ago, according to Bloomberg data.
The number of deals also slipped to 787, compared with 840 transactions in Q2FY25, reflecting a slowdown in corporate deal-making momentum.
The 9.57 per cent decline in deal value marks a reversal from the sharp growth seen last year, when India had emerged as one of the most active M&A markets in Asia.
The fall comes at a time when global investors are adopting a more cautious approach amid fears of US tariff impact, valuation gaps, and increased scrutiny on leverage-backed transactions.
Still, Q2FY26 remained active for large-ticket transactions.
Deals such as Capgemini’s acquisition of WNS Holdings, Tata Motors’ buy of Iveco group’s stake, and Wilmar International’s purchase of AWL Agri Business from Adani Enterprises underlined continuing appetite for scale plays in IT services, auto, and technology companies.
Real estate also saw interest, with Nexus Select Trust acquiring the Diamond Plaza mall in Kolkata for $681 million.
By volume, the September 2025 quarter’s 787 deals still represented strong activity compared with pre-pandemic years, though below the 840 clocked in the same quarter last year.
Strategic buyers accounted for a majority of the activity while private equity transactions slowed as funds grappled with high valuations sought by Indian companies.
“The sentiment among private equity/venture capital (PE/VC) investors continues to be cautious.
"Global headwinds such as geopolitical uncertainties, shifting trade tariff and immigration policies, and the continued rupee depreciation have dampened confidence," said Vivek Soni, partner and national leader, private equity services, EY.
On the other hand, Soni said domestic indicators like robust goods and services tax (GST) collection, growth in advance direct tax collection, strong pipeline of initial public offerings (IPOs), and resilient consumption demand continue to reflect the underlying strength of the Indian economy, keeping seller expectations high.
"Moreover, the recent reduction in GST rates is expected to boost household disposable income, further supporting a consumption-driven growth cycle that could provide a green flag to investors.
"Looking ahead, US tariff and immigration policy updates, Federal Reserve rate cuts, and domestic quarterly corporate earnings are the three main factors that will collectively shape investor sentiment.
"As of now, the bid/ask spread between sellers and buyers remains high, impacting investment activity.
"We remain cautiously optimistic about the short-term outlook for Indian PE/VC investment and exit activity,” Soni said.
“Dealmakers are waiting for greater clarity on interest rates and global liquidity before committing to new large transactions.
"Sectors like renewables, infrastructure, and consumer will continue to see interest, but overall activity is likely to stay moderated in the near term,” he added.
The trend also mirrors a broader global cooling in dealmaking. After the post-pandemic boom in cross-border M&A, activity has slowed in both the US and Europe.
In India, which had outperformed its peers in 2024 with a 50 per cent year-on-year surge in deal value, it has now returned to more normalised levels.
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