India Q2 tech investment dips; digital infra, communication hold fort

India’s tech sector recorded 60 deals worth USD 460 M in AMJ 2025, marking a steep fall in value, while communication, infra, quantum, and space held firm.

- BY SHUBHENDU PARTH

India's technology investment landscape experienced a significant contraction in the second quarter of CY 2025, recording 60 transactions worth USD 460 million—a 34% drop in volume and a sharp 79% decline in deal value compared to the previous quarter, according to the Grant Thornton Bharat Technology Dealtracker. The downturn reflects growing investor caution amid macroeconomic uncertainties and a marked shift in capital deployment strategies, favouring smaller, targeted deals over large-ticket transactions.

Excluding public market activities, the technology sector saw 58 deals amounting to USD 434 million, reflecting a 35% decrease in volumes and a 61% drop in value quarter-on-quarter. Similarly, private equity (PE) deal volumes dropped 45% to 36, while values slumped to USD 215 million. Initial Public Offering (IPO) activity dropped to zero, and Qualified Institutional Placements (QIPs) were restricted to just two transactions totalling USD 26 million, down from one USD 70 million QIP in the previous quarter.

This recalibration in Q2 underscores increased investor selectivity, focusing on value-driven, smaller transactions rather than large-ticket deals prevalent in Q1 2025, notably influenced by Hexaware Technologies' USD 1 billion IPO.

M&A DRIVES DEAL VALUE AMID CAUTION

M&A activity remained relatively steady at 22 deals, but total deal value more than doubled, rising 133% to USD 219 million compared to the previous quarter. This increase was primarily driven by two large inbound cross-border deals totalling USD 169 million, accounting for 84% of the M&A value for the quarter. Cross-border transactions dominated in terms of value, with 10 of the 11 international M&A deals involving US-based counterparties. In contrast, domestic transactions formed 50% of M&A volumes, reflecting continued interest in local platform consolidation.