The technology sector of India has recorded deals worth $3.9 billion in the first quarter of 2026, which is the highest quarterly deal value since Q3 2022 (around 4 years), even as overall deal volumes declined, a report showed on Monday.

A report from Grant Thornton Bharat highlighted that a total of 68 transactions were recorded during the quarter, that also includes IPO and QIP activity.

However, volumes fell 8 per cent sequentially, deal value surged 43 per cent, driven by a few large-ticket transactions collectively valued at nearly $3 billion that suggested a clear shift towards high-value, selective investments, it said.

While excluding public market activity, the sector saw 66 deals worth $3.4 billion, with volumes declining 7 per cent quarter-on-quarter but values rising 39 per cent, indicating increasing capital concentration in fewer transactions.

Moreover, deal volumes dropped 26 per cent year-on-year, while total value more than tripled, rising 208 per cent.

According to Raja Lahiri, Partner and Technology Industry Leader, Grant Thornton Bharat, domestic technology deal landscape is undergoing a structural transformation, with capital increasingly focussed on high-conviction opportunities.

He also noted that Artificial Intelligence (AI), particularly generative AI, is becoming central to investment decisions, driving capability-led acquisitions in areas such as AI, cloud, and digital engineering, while positioning Indian firms as global consolidators.

In the Mergers and Acquisitions (M&A) segment, deal volumes remained steady at 21 transactions, but values surged more than threefold to $2.6 billion.

In addition, outbound deals dominated M&A activity, contributing around 97 per cent of total value, while domestic transactions accounted for the bulk of volumes but a marginal share of value. On the other side, inbound activity remained limited during the quarter.

Additionally, private equity and venture capital activity moderated, with 45 deals worth $848 million, a 49 per cent decline in value due to the absence of large-ticket investments.

However, a single deal accounted for nearly 71 per cent of the total PE value, highlighting continued concentration of capital.

Despite the moderation in values, PE/VC continued to dominate volumes, contributing around two-thirds of total deal activity, with sustained momentum in early and mid-stage investments, particularly in AI-driven and enterprise technology segments, according to the report.

The report also pointed out that a two-speed market, with strong early-stage activity coexisting with cautious large-scale funding, as investors prioritise profitability and capital efficiency.