India's corporate dealmaking scene is poised for another robust year in 2026, building on a remarkably strong performance in 2025. The momentum in mergers and acquisitions (M&A) is expected to be sustained, driven by healthy corporate finances and rising confidence among business leaders.
A Record Year Sets the Stage
The foundation for this optimism is the impressive activity witnessed in 2025. Domestic consolidation within India reached a staggering $104 billion, marking its strongest performance in two years. Simultaneously, inbound deals, where foreign entities invest in Indian companies, climbed to $30 billion. A significant portion of this inbound activity came from banks in East Asia and West Asia acquiring stakes in Indian financial institutions.
On the outbound front, Indian companies were equally assertive. Outbound deals, where Indian firms acquire overseas assets, surged to $22 billion this year, the highest level in a decade. This surge was notably led by the overseas acquisition spree of Tata Motors. When compared to other emerging markets, India secured the second position in deal value, trailing only China, which recorded $410 billion in activity, according to data from Dealogic.
Drivers of the 2026 Momentum
Bankers and legal experts point to several factors fueling the positive outlook for the coming year. S Sundareswaran, Morgan Stanley's India head of M&A, stated, "In 2026, we anticipate continued momentum in mergers and acquisitions, driven by strong balance sheets and growing corporate confidence." He further noted that while sectors like financial services, technology, and healthcare have traditionally dominated deal flows, a broader range of industries is expected to participate actively next year.
Amit Thawani, Nomura's India head of investment banking, highlighted that domestic consolidation will remain a central theme as companies seek strategic growth within the country while also exploring select international opportunities. Thawani also observed a shift in the profile of participants: "While conglomerates have traditionally led domestic consolidation, we are increasingly seeing mid-cap companies, which were virtually absent before, also entering the M&A arena."
Evolving Nature of Inbound Investment
The character of inbound M&A is undergoing a significant transformation. Rahul Mody, co-head of investment banking at Ambit, identified financial services, consumer sectors, and infrastructure as areas that will continue to attract foreign investors over the long term.
However, the strategy is changing. Sumeet Abrol, partner at Grant Thornton Bharat, explained that inbound M&A is moving from a volume-driven to a value-driven model. "While deal volumes have declined over the past three years, transaction values rose sharply this year," Abrol said. This trend signals that foreign investors are becoming more selective, committing larger sums per deal, and focusing their investments on sectors that align with government policy.
The overall optimism for an active 2026 is underpinned by India's strong macroeconomic fundamentals, including rising disposable incomes, steady consumption growth, and a supportive policy environment. The government has implemented several measures to facilitate dealmaking, such as allowing banks to finance M&A transactions, raising foreign direct investment limits in insurance, and permitting direct share swaps between Indian and foreign companies.
Adding to the positive sentiment, Bharat Anand, senior partner at Khaitan & Co, mentioned that expectations of lower interest rates from the US Federal Reserve could further support dealmaking by reducing borrowing costs globally. A landmark deal on the horizon is the proposed $2.3 billion overseas acquisition of Encora by the Indian IT firm Coforge, which is set to be among the first major deals under revised foreign exchange rules allowing indirect foreign ownership.
