Technology M&A 2026 Comparisons

With the uptick in 2024 and following the same trends, the first half of 2025 has seen an increase in deal value (versus the deal volumes). Despite global political and economic instability, deal values have increased while deal volumes have decreased. Across sectors, Indian deal values in the first half of 2025 have been reported to be approximately USD50 billion. Some of the most significant deals in the technology sector included New Mountain Capital’s majority stake acquisition in Access Healthcare Services, Altimetrik’s acquisition of SLK Software, a global technology services firm, and Kedaara Capital’s buyout of Impetus Technologies. Quarter 3 of 2025 saw a 33% quarter-on-quarter increase in technology M&A deals. 

While detailed figures for the full technology sector across the first three quarters of 2025 are still to be reported, the sector is estimated to account for roughly 40% or more of India’s total M&A deal value, reaffirming its dominant role in the market.

A clear trend has been established wherein acquirers are prioritising value over volume, focusing on larger, strategically significant transactions in areas such as AI, enterprise SaaS, automation, and cloud-native infrastructure. Domestic acquisitions are on the rise as well, cross-border interest is returning after an initial dip in the year, and platform-driven technology assets are commanding valuation premiums.

In 2025, India saw a rise in the number of unicorns, mostly in the tech space. This includes Ai.tech, Navi Technologies, Rapido, Netradyne, Jumbotail, Darwinbox, Moneyview, Juspay, Drools, Vivriti Capital, and Veritas Finance. Few tech companies have undertaken initial public offerings in 2025, with the notable listings being Aditya Infotech, which raised USD151 million, and LG Electronics, which reportedly raised USD1.3 billion.

Notable reasons for the uptick in this financial year (2025-26) have been:

• the Indian government’s focus on the technology sector in its budget for FY 2025-26, allocating USD1.25 billion to artificial intelligence (AI) development;
• changes in the Indian Foreign Exchange Management (Non-Debt Investment Rules) 2019 and the further clarifications issued by RBI in their Master Directions referred to in 6.3 Consideration and Minimum Price, especially in relation to cross-border share swaps between resident and non-resident parties;
• pursuant to the amendments to the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 due to which companies are permitted to proceed with a cross-border merger once approval from the Reserve Bank of India (“RBI”) is obtained, instead of approaching the National Company Law Tribunal, the Ministry of Corporate Affairs (MCA) amended the aforementioned rules to inter alia permit mergers between a foreign holding company and its wholly-owned Indian subsidiary via the fast track process, thereby further expediting the merger process and allowing parties to more definitively estimate the timeframes involved in consummating or closing the transaction; and
• proposed hikes in Foreign Direct Investment (FDI) limits could spur consolidation and capital inflows (the new automatic FDI route for satellite and space activities makes this an emerging sector for M&A transactions).

One of the key trends in technology M&A transactions in India has been the increase in deal values. Deal value in M&A deals in the technology sector has seen (in the second quarter of 2025) a 133% increase from the first quarter of 2025 and a further increase of 239% from the second to the third quarter. Another trend has been the focus on AI platforms and infrastructure-based innovation, technological services, and automation. AI-based deals have been focusing on infrastructure innovation, such as Kluisz AI, which offers an AI-based cloud platform and Maieutic Semiconductors, which offers AI agent services for increasing design efficiency in the semiconductor industry.

Start-up companies previously considered establishing their companies or domiciling in foreign jurisdictions to ease access to capital and investment, clientele, and business and capital markets. The trend of companies consolidating in India or incorporating abroad and then considering “reverse flipping” to India is continuing to grow. A few examples of reverse flipping by Indian companies involved in the e-commerce and/or technology sector in recent years include:

• in late 2024, Zepto initiated its reverse flipping process from Singapore to India. Following this move, the company raised USD350 million to restructure its capital table, increasing domestic and foreign investor representation alike;
• Razorpay completed the process of relocating its parent company’s legal domicile from the United States to India in May 2025. This strategic move is intended to align its structure with Indian regulations for a potential future IPO.

Various reasons for the change in trend and interest include the target market of these companies being primarily in India, better valuation proposition at the Indian exchanges as opposed to exchanges in foreign jurisdictions, considering the valuation of the companies being more conducive for the Indian market, and the general political and economic instability globally being faced by the companies. In a timely move, the government continues to implement several government and regulatory policies that will help facilitate these commercial moves.

It takes approximately two to three weeks to incorporate a private limited company in India, although the process has been quicker in some cases. Furthermore, pursuant to the Indian Companies (Amendment) Act, 2015, the minimum capital requirement of INR100,000 (approximately USD1,200) has since been omitted from the Indian Companies Act, 2013.

Start-up companies have mostly chosen to incorporate as private limited companies, given the familiarity of the structure and the established precedents governing various aspects of law and business operations. This is particularly critical when nuanced structures are required because of the specific nature of the transaction.

However, limited liability partnerships (LLPs) are also prevalent amongst newly incorporated entities due to comparatively limited compliance requirements, along with specific tax benefits. For LLPs, taxes are not levied on profit distribution among partners, whereas in private companies, taxes are required to be paid on corporate income by the companies, as well as on dividends by shareholders.

Entities also have the option to convert from an LLP to a private limited company and vice versa. The Indian Companies Act, 2013, also allows the establishment of a one-person company structure.

The Department for Promotion of Industry and Internal Trade continues to offer financing through the Start-up India Seed Fund Scheme (“SISFS”) with an outlay of INR9.45 billion (approximately USD111.84 million). According to Indian government figures, the scheme will support an estimated 3,600 entrepreneurs through 300 incubators over the next four years. The SISFS will be disbursed to eligible start-ups through eligible incubators across India.

For government funding, an online call for applications is often posted, pursuant to which start-ups are shortlisted. Upon selection, certain government-prescribed guidelines must be complied with, including the utilisation of funds as per those guidelines.

Along with central government schemes, certain state governments have also offered funding to early-stage start-ups, such as the Karnataka Government’s Elevate 2025, which provides a one-time grant-in-aid of up to INR50 Lakhs (approximately USD56,360). Elevate was launched by the Department of Electronics, IT, Biotechnology and Science & Technology, Government of Karnataka, to identify and nurture the most innovative start-ups and to provide them the necessary boost at various stages through funding or mentoring.

Venture capital firms, angel investors, family offices and high-net-worth individuals provide early-stage financing to start-ups. Documentation for these investments is quite formal and fairly standard, though it is more detailed and nuanced for venture capital financing rounds. Early-stage investments take the form of convertible or SAFE notes, which progress to equity and, optionally or compulsorily, to convertible instruments.

There are numerous local venture capital firms and investment firms associated with high-net-worth individuals and family offices that provide venture capital, which are easily available to start-ups. Funding from foreign venture capital firms is also a common source for start-ups in India, beyond angel funding and family and friends rounds.

Documents pertaining to venture capital investments have become quite standardised over the years.

Start-ups are often incorporated as private companies. To give effect to exit mechanisms where the proposal is to list on an exchange, these private limited companies convert into public companies.

In terms of jurisdiction, companies tend to domicile or redomicile in a jurisdiction based on the key target and operating markets, access to funds, business valuations, and opportunities to list, as discussed in 2.1 Establishing a New Company.

According to various reports, the Indian IPO market remained resilient in the 2025-26 financial year amid global economic volatility and shifting investor sentiment. However, in relation to tech start-ups, listings have been fewer, which in the first half of 2025 only included Ather and Arisinfra. However, several companies have recently received approvals for their initial public offers from the Securities and Exchange Board of India, including Shadowfax and CureFoods, with Sterlite Electric also advancing its listing plan. Notably, eyewear retailer Lenskart has recently listed on the stock exchanges.

The Ministry of Corporate Affairs (MCA) has recently required most companies to dematerialise their securities. Accordingly, the Securities and Exchange Board of India (SEBI) has mandated all pre-IPO shareholders to dematerialise their securities before filing the draft red herring prospectus with the authorities. Recently, National Securities Depository Limited (NSDL) has issued a circular stating that any transfer of dematerialised shares would require the consent/ confirmation letter from the company.

IPOs are considered one of the key exit options as they provide liquidity to all stakeholders. Strategic or secondary sales as an exit option are also explored, and the nature of the exit depends on the entity’s business, market interest, and growth prospects.

Investment documentation would typically include all exit options (ie, IPO, secondary or strategic sale), and the stakeholders take a final decision based on various factors, including these ones.

On 24 January 2024, the Ministry of Corporate Affairs released the Companies (listing of equity shares in permissible jurisdictions) Rules, 2024. These rules permit certain unlisted and listed public companies to list in permissible foreign jurisdictions at the Gujarat International Finance Tec-City – International Financial Services Centre (“GIFT-IFSC”) in India, where they satisfy the prescribed conditions.

Currently, the only permitted exchanges are the India International Exchange and the NSE International Exchange in the GIFT-IFSC. Trading on these exchanges can only be undertaken by “permissible holders”, which are defined as “not a person resident in India”.

Certain companies have been seen primarily listing on the Indian stock exchanges’ main boards, while others take the route for small- and medium-sized enterprise (SME) IPOs. Recently, the government expanded the definition of “SMEs” by prescribing different thresholds for small and medium enterprises to facilitate more companies coming within the purview of an SME, which has fewer compliance requirements than listing on the main board. SMEs proposing an initial public offer should ensure that their post-issue paid-up capital is not in excess of INR100 million (approximately USD1.18 million), or their post-issue face value capital, if in excess of INR100 million (approximately USD1.18 million), should not be in excess of INR250 million (approximately USD2.9 million).

While several options are available, the decision to list on a home country exchange or a foreign exchange is dependent on factors discussed in 3.1 IPO v Sale.

Certain minority squeeze-out provisions have been detailed in 6.8 Squeeze-Out Mechanisms. Accordingly, an Indian company listing on a foreign exchange, as per 3.2 Choice of Listing, may still avail of the squeeze-out mechanisms available to companies under the Indian Companies Act of 2013, subject to and in accordance with any specific mechanisms of the relevant exchange on which it is listed.

In a proposed liquidity event of a company, the shareholders may choose to sell via an auction, a bid process or a bilateral negotiation. While bilateral negotiations are more common, auctions are also used for transactions of higher value.

Auctions are sometimes considered more efficient for the seller as they are implemented in parallel with various prospective purchasers to achieve the intent of sale within a definitive time period and ensure faster negotiations and definitive closure. Bilateral negotiations are focused on sales and acquisitions and may therefore take longer. There can be further delays if bilateral negotiations do not conclude, and the company or seller would have to restart the process.

The revised regulatory scrutiny for the acquisition of companies with digital platforms has extended transaction timelines. The parties to such transactions now seek to include digital personal data privacy (“DPDP”) related compliance warranties and data-related representations into the definitive documents, given the notifications of the Digital Personal Data Protection Act, 2023 and the release of the rules thereto in 2025 for public comments, as further detailed in 7.1 Regulations Applicable to a Technology Company and 9.2 Data Privacy. 

The structure of a transaction in case of a liquidity event would vary depending on numerous factors. When there are several investors on the cap table, preferred options are to list the company or to carry out a full company sale. In cases where there are fewer investors or the promoter is a key stakeholder and also fully involved in operations, a controlling stake sale or a strategic buyout is also common.

There are also instances of mergers between two tech companies. The most prominent in recent years has been Altimetrik’s acquisition of SLK Software in October 2025.

Cash is typically the primary form of consideration in India and is fully settled upon the closing of the transaction, unless a valuation gap is not mutually agreed upon during negotiations. In these instances, the transaction is sometimes structured with multiple tranches of closing, with an earn-out component. In certain other cases, a full stake sale is also structured with a rollover equity investment in the acquirer entity.

Founders who are involved in day-to-day operations and management are expected to stand behind the representations and warranties for specified periods, depending on the nature of the representations and warranties. VC investors typically provide representations only regarding the title to the securities they hold.

There is a longer time period offered for indemnity pertaining to fundamental warranties as compared to business warranties. Business warranties are often provided for the time period prescribed under law. These time periods vary depending on diligence findings and the nature of the outstanding or likely claims that may arise in the future. These factors also determine the necessity of an escrow holdback. However, escrows are uncommon unless significant potential claims are identified during diligence. In case of a transaction involving both Indian and foreign parties, escrow mechanisms are subject to the Indian Foreign Exchange Management Act, 1999 and the underlying rules and regulations (see 6.3 Consideration and Minimum Price).

Representations and warranties insurance is not uncommon in India. This type of insurance is typically used for larger deals due to the high cost and effort required to obtain it. They are also considered in deals involving treaty-based withholding taxes. However, where transactions are of smaller value, there are no tax-based risks, or due diligence findings are comprehensive and clear, R&W insurance may not be used. Procuring R&W insurance is also a time-consuming process that deal-makers are mindful of.

Spin-Offs

Spin-offs are common, and an undertaking often decides to spin off for business reasons involving operational efficiency, unlocking value, independent focus, and targeted fundraising options for a specific business vertical. Companies are increasingly using spin-offs to isolate data-intensive/AI-related divisions ahead of the enforcement of DPDP-related laws in India (see 7.1 Regulations Applicable to a Technology Company and 9.2 Data Privacy).

Mergers

The fast‑track merger process under Section 233 of the Companies Act, 2013, which now, following the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2025 (notified on 4 September 2025), extends beyond previously limited categories (holding‑company/wholly‑owned subsidiary, start-ups, small companies) to include:

• two or more unlisted companies (other than Section 8 companies) subject to prescribed thresholds;
• a holding company and one or more of its unlisted subsidiaries (whether wholly owned or not), provided the transferor is unlisted;
• two or more subsidiaries of a common holding company (provided the transferor is unlisted); and
• a foreign holding company merging into its Indian wholly‑owned subsidiary (reverse‑flip).

While this route is available, the companies eligible for it may still opt for the regular merger route – ie, before the National Company Law Tribunal (NCLT). This decision may sometimes be driven based on whether the fact pattern involving the merger requires NCLT’s involvement and wisdom.

Spin-offs can be structured in a tax-compliant and efficient manner, depending on the nature and corporate structure or treatment of the business. Demergers are considered tax-efficient where there is a preference to replicate the share capital and pre-agreed inter se economic interests of the stakeholders. Some spin-offs may require approval from regulatory authorities, while others can be effected within shorter, definitive timeframes akin to contract-based investment transactions.

Follow-on business combinations are possible and are often considered in the context of specific business requirements or tax and other operational efficiencies. In certain cases, these transactions take the form of a demerger (of a specific business from one entity) followed by a merger (into the target entity). However, it is not always the norm, and both restructurings (demerger and merger) can be undertaken independently. These decisions are often also dependent on the stakeholders involved, the terms governing their investments in the company, and the potential investments and fundraises that will govern the company’s business operations.

Spin-offs can be undertaken through business transfer agreements, asset transfer agreements, slump sales or demergers. The time period for concluding these spin-offs would be dependent on the manner in which the spin-offs were executed.

For example, in demergers, approval from the National Company Law Tribunal is required. Other compliance requirements include issuing a public notice and notifying creditors and stakeholders. Demergers can accordingly be time-consuming, whereas a slump sale, business transfer, or asset sale can be concluded quickly, as they involve only independent parties and do not involve any regulatory agency.

Purchasers or acquirers often require the seller to confirm that there are no pending or likely claims from the tax authorities, as, under Indian law, a sale of an asset during ongoing tax proceedings can be reversed by the authorities, with a few exceptions.

Where there is an acquisition of a material stake in a public-listed company in India (breaching a defined threshold, either individually or in the aggregate), an “open offer” has to be made to the public shareholders. The “open offers” must cover at least 26% of the target company’s shareholding.

SEBI’s Regulations (the “SEBI Regulations”) stipulate that any acquirer, along with individuals acting in concert with them, must disclose their total shareholding and voting rights in a target company if their combined ownership equals or exceeds 5% of the company’s shares. This reporting will have to be undertaken within two working days of receipt of intimation of allotment or acquisition of shares or voting rights.

The buyer is required to disclose its intention to either delist the target company or retain the listed status of the target company in the public announcement required to be made.

The SEBI Regulations stipulate in certain instances that a mandatory “open offer” is made, ie, where:

• the acquirer proposes to acquire 25% or more of the shares or voting rights in a target company;
• the acquirer’s stake is equal to or exceeds 25% of the voting rights in the target company, and there is a proposal to acquire an additional 5% of the target company’s shares or voting rights, etc.

All of these instances include the stake of the acquirer and the persons acting in concert with the acquirer together in determining if there is a breach of the threshold or trigger for the “open offer”.

Acquiring a publicly listed company in India may be achieved through one or more or a combination of structures.

Possibly the most straight forward structure is acquisition via stock exchanges or negotiated contracts. As part of negotiated contracts, block deals – where large-volume transactions are completed through dedicated trading windows based on pre-agreed terms between the buyer and seller – are popular.

Acquisition of shares may be by way of fresh issuances as well. This structure requires a preferential allotment of shares by the listed company in terms of the Companies Act, 2013 and SEBI Issue of Capital and Disclosure Requirements Regulations. This route is taken when the listed company requires additional funding for its general business expansions or any specific projects, and sometimes these are done in combination with debt funding to maintain a healthy debt-equity ratio.

There may also be cases where the sale or acquisition of particular business division/unit of a listed company is under discussion. In such scenarios, the concerned parties may consider a de-merger or slump sale of the business division to the acquirer. In the case of a de-merger route, it will be through a scheme of de-merger before the NCLT. Whereas a slump-sale transaction can be undertaken through a private contract. A de-merger may have certain inherent tax and regulatory advantages when compared to a slump-sale structure, although a slump-sale deal will generally be faster to execute and complete.

There are also instances of listed companies being acquired through a corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC) before the NCLT. These are cases where the listed companies are generally not able to meet their debt obligations. Accordingly, the IBC provides a mechanism for these distressed companies to, inter alia, be taken over by potential acquirers through a resolution plan to be submitted and approved by the committee of creditors and the NCLT.     

All these acquisitions are generally carried out through regulated mechanisms under the Companies Act, 2013, SEBI Regulations, IBC and, where applicable, the Competition Act, 2002. Also, open offer requirements or creeping acquisition reporting will be part of such acquisitions as mentioned in 6.2 Mandatory Offer.   

In India, it is typical for cash to be the primary form of consideration, as discussed in 4.3 Liquidity Event: Form of Consideration.

There are also certain pricing norms under the Indian Foreign Exchange Management Act, 1999. In the event a non-resident party purchases the stake from an Indian resident person or party, the purchase price cannot be lower than the fair market value, as determined on an arm’s-length basis by a registered valuer. There is also an option to make a deferred payment to achieve a specific commercial outcome, provided the payment is made within 18 months of the date of the transfer agreement. The circular amending master directions issued on 20 January 2025 (“Master Directions”) further clarify that such arrangements should be recorded in the share purchase/transfer agreement.

The deferred consideration or payment cannot exceed 25% of the total consideration, and the amount effectively paid must comply with pricing norms. Similarly, sellers can provide an indemnity escrow of up to 25% of the total consideration for up to 18 months, provided the amount effectively paid remains compliant with pricing norms. Pursuant to the Master Direction, the deferred consideration option has been extended to downstream investments by foreign-owned and controlled companies.

For takeover offers, there are minimum price stipulations as well. The regulations governing takeovers provide various mechanisms for calculating the “open offer” price, depending on the nature of the acquisition.

Common conditions for a takeover offer include:

• minimum mandatory offer;
• price conditions;
• escrow conditions; and
• interest in the event of a delay in payment.

In negotiated transactions, parties can enter into an acquisition agreement or a binding contract. These agreements would trigger a mandatory “open offer”. Target companies are typically contractually obliged to ensure that the company’s business and operations are run in the same manner, to ensure the non-alienation of any assets, or to enter into voting arrangements and obligations of this nature.

If the board considers the transaction beneficial, it will recommend it to its stakeholders and seek approval. Representations and warranties are included as negotiated to ensure that any unknown liabilities or claims do not erode the transaction value. Acquirers are intent on including specific warranties on DPDP compliance, data transfers, storage, and consent requirements, with suitable materiality thresholds aligned with the nature of the target company’s data processing activities. Conditions precedent to such transactions include specific regulatory approvals or filings as may be required.

An acquirer may make an “open offer” conditional on the minimum level of acceptance, provided that there is a condition to the effect that in the event the desired level of acceptance of the “open offer” is not received, the acquirer will not acquire any shares under the “open offer” and the underlying transaction that triggered the “open offer”.

There are squeeze-out mechanisms that essentially allow acquirers to acquire a company’s delisted shares to consolidate ownership. Under the Indian Companies Act, 2013, if a scheme of arrangement or contract involving a share transfer is approved by those holding at least 90% in value within four months of making an offer, the transferee company can notify dissenting shareholders within two months of the end of this period to acquire their shares.

However, the dissenting shareholders can approach the National Company Law Tribunal to object to the acquisition of their shares if the scheme is not in the public interest, is not just, fair, or reasonable, or unfairly discriminates against a class of shareholders.

There are also provisions for a 90% stakeholder in a company to notify the company to purchase the remaining stake in the company.

A company can also buy back its shares. A board resolution is required for a buy-back of up to 10% of the company’s total paid-up capital and free reserves. However, a special resolution would have to be passed by the members of the company for the buy-back of 10% or more of the company’s total paid-up capital and free reserves.

There is a further cap of 25% of the aggregate of the company’s paid-up capital and free reserves in any one financial year, and a subsequent offer of buy-back can only be made one year after the date of closure of the preceding offer of buy-back. However, buy-backs are merely offers by the company, and shareholders do not have to participate.

Listed companies can delist their equity shares as per the relevant guidelines.

Before making the public announcement of an “open offer” for acquiring shares under the regulations, the acquirer will ensure that firm financial arrangements have been made for fulfilling the payment obligations under the “open offer” and that the acquirer is able to implement the “open offer”, subject to any statutory approvals for the “open offer” that may be necessary. Furthermore, the acquirer will, no later than two working days prior to the date of the detailed public statement of the “open offer” for acquiring shares, create an escrow account as security for performance of their obligations under the relevant regulations, and deposit such aggregate amount in the escrow account as per the relevant regulations.

The following deal protection measures may be available.

• Break-up fees or reverse break-up fees are not very common in the Indian transaction market. There is also a restriction on public companies to provide financial assistance for the purchase or subscription of their own shares.
• Matching rights would apply akin to a right of refusal in the event of a competing bid, although they would not apply during an exclusivity period.
• Exclusivity periods are typically stipulated to prevent companies from soliciting other bids and to give effect to any conditions that may need to be complied with.
• In most instances of a proposal to transfer shares involving a material or significant stake, approval of the company’s shareholders is required under the terms of a shareholders’ agreement executed between the parties.

The buyer would typically have visibility on the minimum quantum of shares that they would hold after the acquisition. So long as the unacquired shares are not significant enough in quantum to have an impact on the manner in which the acquirer would prefer to operate the business, the acquirer may proceed with the transaction.

No alterations solely affecting the rights of the remaining shareholders, which may be considered prejudicial or disproportionate, can be made. However, certain challenges would remain in giving effect to related party transactions within the acquirer group.

In negotiated transactions, principal shareholders provide confirmations to sell their shares by executing binding contracts. Typically, there is no opportunity to pursue a better offer unless the acquirer violates the contractual terms, the exclusivity period or long-stop date has expired, or a condition precedent for closing cannot be met.

Companies first issue a draft offer document, which is filed with the SEBI. Draft offer documents are available in the public domain, including the portal of the SEBI, the concerned stock exchanges, or the concerned merchant banker. The detailed timeframes for the various steps leading up to the listing are contained in the offer document.

Once made, an “open offer” cannot be withdrawn, except, inter alia, in the following circumstances.

• Statutory approvals required for the “open offer” or for effecting the acquisition have been refused, subject to the requirement for approvals having been specifically disclosed in the detailed public statement (“DPS”) and the letter of offer.
• Any condition stipulated in the share purchase agreement is not met for reasons beyond the reasonable control of the acquirer, provided that the condition has been specifically disclosed in the DPS and the letter of offer.
• Such circumstances that, in the opinion of SEBI, merit the withdrawal of the “open offer”.

If the acquirer is unable to make the payment within ten working days of the closure of the “open offer”, the acquirer will be required to pay interest (at a rate specified by the SEBI) to the shareholders of the target company for the delay. If statutory approvals are required for some but not all shareholders, the acquirer can make payments to those shareholders for whom no such approvals are required to complete the “open offer”.

The Indian Companies Act, 2013, is the primary law that governs companies. For certain businesses (payment gateways and payment aggregators, non-banking financial companies), approvals from other authorities, such as the RBI, are required.

Depending on the nature of the proposed business activity, it can take 8-12 weeks to obtain approval.

The DPDP Act is the principal statute for data protection and personal data processing in India. With the notification of the DPDP Rules, the DPDP Act is now in effect. The DPDP Rules clarify obligations for data fiduciaries, consent processes, breach notification, cross-border transfers and “significant data fiduciary” obligations. Key requirements under the DPDP Act’s framework include clear, independent notices and purpose-specific consent processes, data-localisation triggers, strong security safeguards such as encryption and contractual controls with data processors, and strict, time-bound breach reporting to both affected data principals (ie, those individuals to whom the personal data relates) and the data protection board and penalties. Large entities are required to comply with defined data retention timelines, including mandatory deletion within three years of a user’s last interaction and a 48-hour erasure notice requirement. The regime also introduces the framework for consent managers (ie, those persons registered with the Data Protection Board of India), mandating regulated intermediaries to manage consent flows while maintaining fiduciary duties, interoperability and conflict-free operations.

All of the above are likely to impact technology M&A deals, especially for companies handling large volumes of personal data.

The DPDP Rules implement a staggered approach in relation to the effective date of various provisions and this is a critical factor for global compliance planning:

• The establishment of the Data Protection Board of India and its operational procedures took place with immediate effect on 14 November 2025.
• The framework for the registration and detailed obligations of consent managers to act as a point of contact to enable a data principals to give, manage, review and withdraw consent, comes into force a year later on 13 November 2026.

• The core compliance duties, including notice, security safeguards, breach intimation, significant data fiduciary obligations, and data principal rights, begin to apply 18 months later on 13 May 2027.

The primary securities market regulator for M&A transactions involving listed entities in India is the SEBI. In a recent change, the RBI is also providing certain inbound merger approvals. Approval from the National Company Law Tribunal would otherwise be required for merger transactions that do not satisfy the conditions for a fast-track merger. Parties would factor in a specific time period for obtaining the necessary approvals in the documents they executed between themselves.

There are also other sector-specific regulators (such as the Competition Commission of India and the Insurance Regulatory and Development Authority) whose approval may be required, depending on the nature and sector of the business operations of the entities involved.

In India, 100% foreign direct investment (FDI) is permitted under the automatic route in many sectors. However, there are important exceptions, inter alia, including sectors such as gambling and betting businesses; real estate businesses; trading in transferable development rights; manufacturing of tobacco products; agriculture; atomic energy; and others, where FDI is either prohibited or allowed only through the government approval route. Additionally, several sectors have FDI caps or regulatory restrictions requiring prior approval. Investments from countries sharing land borders with India or where the beneficial owner is from such countries are permitted only with government approval, reflecting national security considerations.

All investments made through the direct route require the prescribed filings under applicable foreign exchange regulations. The Government of India continues to liberalise the FDI regime, as exemplified by the 2025 budget, which increased the insurance sector FDI cap to 100% and proposed a similar increase to 49% for public sector banks. Investors should refer to the latest consolidated FDI Policy and Non-Debt Instruments Rules for sector-specific details and conditions.

As detailed in 7.3 Restrictions on Foreign Investments, certain inbound investments can only be made through the government approval route. Investment in sensitive sectors such as telecommunications and defence would also require confirmation from the relevant Ministry, eg, the Ministry of Home Affairs.

The regulatory framework for outbound investments by Indian entities is governed by the Foreign Exchange Management (Overseas Investment) Rules, 2022, and the RBI Master Directions (2024-25). While outbound investments are generally permitted, restrictions apply to certain sectors such as real estate, gambling, and dealings in financial products linked to the Indian rupee, all requiring prior government approval.

Additionally, outbound investments in the financial services sector are also subject to regulatory restrictions. Indian entities engaged in regulated financial services can invest abroad, subject to specific financial and prudential criteria. Investments by non-financial entities or those targeting sensitive sub-sectors often require prior approval from the RBI or government authorities.

This framework balances facilitating overseas expansion with safeguarding domestic financial stability and regulatory oversight, reflecting a liberal yet cautious stance consistent with India’s evolving policy priorities.

Under the Competition Act, 2002, as amended by the Competition (Amendment) Act, 2023 (effective September 2024), certain mergers, acquisitions, and amalgamations, collectively referred to as “combinations,” must be notified to the Competition Commission of India (CCI) if the prescribed jurisdictional thresholds are met.

The current thresholds include two key components, as follows.

Deal Value Threshold (DVT)

From 10 September 2024, any combination where the transaction consideration (direct, indirect, immediate, or deferred) exceeds INR 20,000 million (approximately USD240 million) and the target enterprise has substantial business operations in India must be notified to the CCI, regardless of other asset or turnover thresholds.

The concept of “substantial business operations” includes situations where the target derives 10% or more of its global turnover or gross merchandise value from India, and where its India-based turnover or gross merchandise value (respectively) exceeds INR5,000 million (non-digital sectors).

Asset and Turnover Thresholds

For all other combinations, traditional thresholds remain applicable. Notification is required if inter alia:

• the combined assets of the parties in India exceed INR25,000 million (approximately USD 282,037); or
• the combined turnover of the parties in India exceeds INR75,000 million (approximately USD 846,066); and
• de minimis: The target’s assets in India exceed INR4,500 million (approximately USD50,763) or turnover in India exceeds INR12,500 million (approximately USD141,012).

However, the “de minimis” exemption based on asset or turnover thresholds does not apply if the deal value threshold is breached, emphasising stricter scrutiny for high-value transactions. Filing obligations depend on the nature of the combination: acquirers notify in acquisitions and hostile takeovers, while joint notices are filed for mergers or amalgamations. These thresholds aim to balance transparency and regulatory oversight with ease of doing business by focusing CCI’s attention on economically significant transactions that may impact market competition.

From a labour and employment perspective, Indian companies are now primarily governed, by the four pieces of legislation (collectively referred to as the “Labour Codes”):

• the Code on Wages, 2019;
• the Industrial Relations Code, 2020;
• the Code on Social Security, 2020; and
• the Occupational Safety, Health and Working Conditions Code, 2020.

All four of these were notified to come into effect from 21 November 2025, replacing 29 older central acts. These Labour Codes introduce harmonious rules across the codes on wages, social security coverage (including for gig and platform workers), industrial relations, occupational safety and working conditions. They bring in revised concepts for “wages”, thresholds for standing orders, expanded social security, and new compliance, documentation, and record-keeping obligations for employers.

Information technology or information technology-enabled services sectors may continue to benefit from certain exemptions or relaxations granted by state governments (for example, with respect to hours of work or night-shift deployment, subject to certain conditions). Particular focus areas in M&A transactions should include:

• acquirers undertaking due diligence and seeking representations to verify compliance with the new Labour Codes to ensure correct classification of workers;
• wage and overtime practices mapped to the new “wage” definition;
• social security and gratuity coverage;
• standing orders and retrenchment/closure procedures; and
• health, safety, and workplace facilities as mandated by the Occupational Safety and Health Code.

Given the recency of implementation of the Labour Codes and the pending roll-out of state-level rules, acquirers should seek robust representations, warranties, and indemnities on compliance with the Labour Codes, pending clarity through practice and enforcement.

The RBI is the Indian central bank. For certain transactions, such as inbound mergers, RBI approval is required. Other transactions will need to comply with conditions, such as pricing, to fall within the purview of transactions under the automatic route.

Some key legal developments in technology M&A are as follows.

• The government recently notified the Promotion and Regulation of Online Gaming Act, 2025, which prohibits any person from offering, aiding, abetting, inducing or otherwise indulging or engaging in the offering or advertising of online money games and online money gaming services or facilitating any transaction or authorising funds towards payment for any online money gaming service.
• Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and the Master Directions: the transfer of equity instruments of an Indian company between a resident and non-resident may be effected by way of any of the following two swaps:
1. a swap of equity instruments of another Indian company; and
2. a swap of equity capital of a foreign company in compliance with the Overseas Investments Rules.
• In order to promote cross-border transactions in Indian Rupees (INR) and local/national currencies, RBI has issued guidelines amending the Indian Foreign Exchange Management Act, 1999 and the rules and regulations, including:
1. overseas branches of Authorised Dealer banks will be able to open INR accounts for a person resident outside India for settlement of all permissible current account and capital account transactions with a person resident in India;
2. persons resident outside India will be able to settle bona fide transactions with other persons resident outside India using the balances in their repatriable INR accounts, such as the Special Non-resident Rupee account and the Special Rupee Vostro Account;
3. persons resident outside India will be able to use their balances held in repatriable INR accounts for foreign investment, including foreign direct investment, in non-debt instruments; and
• Indian exporters will be able to open accounts in any foreign currency overseas for the settlement of trade transactions, including the receipt of export proceeds and their use to pay for imports.
• Further, on 11 June 2025, the Government of India issued an amendment to Rule 7(2) of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. This amendment permits Indian companies engaged in sectors where Foreign Direct Investment (FDI) is prohibited to issue bonus shares to pre-existing non-resident shareholders. Indian companies operating in FDI-prohibited sectors can now issue bonus shares to their existing non-resident shareholders, so long as their shareholding pattern remains unchanged, and this bonus issuance must comply with the applicable laws, ie, Section 63 of the Indian Companies Act, 2013 and in case of listed entities, also the applicable SEBI Regulations.
• RBI on 8 May 2025, introduced the RBI (Digital Lending) Directions, 2025 (“Digital Lending Directions”). The Digital Lending Directions have introduced 2 (two) key new initiatives (increased transparency in digital loan aggregation and a directory of Digital Lending Apps), which should guide the digital lending industry on the path to sustainable and effective growth. It further represents a comprehensive regulatory intervention to balance innovation with consumer protection and systemic stability and prioritises and strengthens borrower trust. The Digital Lending Directions aim to reduce systemic risks by implementing stricter regulations for lending service providers and default loss guarantee arrangements. They also establish rigorous due diligence requirements for these providers and hold regulated entities explicitly accountable for any actions or omissions by the lending service providers.
• On 13 August 2025, the RBI released the Framework for Responsible and Ethical Enablement of Artificial Intelligence. RBI’s FREE-AI report helps facilitate mergers and acquisitions (M&A) in India’s technology sector by providing a regulatory blueprint for responsible and ethical adoption of artificial intelligence. It introduces seven guiding principles – trust, people first, innovation, fairness, accountability, explainability, and resilience – and structures its recommendations around key pillars such as infrastructure, governance, and risk management. The framework recommends robust data infrastructure, indigenous AI models, adaptive policies, sector-wide capacity building, governance structures, and strong consumer protection. For M&A deals, FREE-AI builds confidence among acquirers and investors by requiring technology firms to comply with transparent governance, equity, and accountability standards for AI systems. This reduces risks around data privacy, algorithmic bias, and operational resilience. By encouraging sector-specific, reliable AI adoption, the report streamlines due diligence, simplifies regulatory approvals, and enables strong post-merger synergies for technology-driven M&A transactions.
• The India–United Kingdom Comprehensive Economic and Trade Agreement (CETA), signed on 24 July 2025, marks a significant development in the evolution of cross-border technology and digital investment between the two countries. Chapter 12 of CETA on Digital Trade facilitates the secure flow of data across borders while maintaining strong standards of data protection and privacy, thereby reducing localisation-related constraints for acquirers. It also prohibits any requirement to disclose source code, encourages paperless trade and e-commerce, and provides a structured framework for cybersecurity cooperation. The Chapter further recognises the importance of digital identity, authentication, and trust services in enabling interoperable fintech and platform transactions. By ensuring non-discriminatory treatment of digital products and services and promoting collaboration on emerging technologies, including artificial intelligence, CETA establishes a transparent and predictable environment for cross-border investment and technology transfer. Once ratified, it is expected to strengthen investor confidence and facilitate greater activity in India–UK technology M&A.

Due diligence information is provided to help the acquirer to evaluate the company’s business, operations, assets, liabilities and statutory compliances to verify that the representations made to them are accurate and complete. The scope and depth of diligence depend on factors such as the nature of the transaction, the industry, the size of the deal, and the degree of regulatory exposure.

Typically, a data room is established to provide access to documents relating to the company’s corporate structure, contracts, statutory filings/registrations, financial facilities, intellectual property, litigation, employment, and any other material aspects. The acquirer’s advisors (legal, financial, tax, and technical) conduct a comprehensive diligence to identify risks, potential contingencies, and gaps in statutory compliance. Findings from this process often influence deal value, representations and warranties, conditions precedent, conditions subsequent and indemnity provisions (including specific indemnity matters) in the definitive documents.

Robust non-disclosure agreements are executed to ensure confidentiality before any information is shared to ensure that sensitive business and confidential data are protected.

Technology due diligence may cover the technology assets, licences, ownership and registration status, contracts executed for use or upon acquisition, and IT infrastructure and processes, including security protocols. However, in 2025, due diligence for technology M&A deals emphasises data privacy compliance and readiness to show compliance with the DPDP Act and the rules thereunder. Deal teams should:

• identify all sources of personal data, data-sharing arrangements, and cross-border transfers;
• examine privacy policies, consent capture mechanisms, breach registers, records of processing activities, and retention/deletion protocols;
• evaluate contractual terms with third-party processors, DPAs, and sub-processor chains for alignment with DPDP requirements;
• request any notices, complaints, or audits by the Data Protection Board or sectoral regulators; and
• check for active cyber or privacy insurance coverage and any relevant exclusions related to breach liabilities.

Additionally, under the Competition Commission of India (Combination) Regulations, 2024, the diligence must confirm whether the target company has substantial business operations in India if the deal value threshold is met.

The DPDP Act was finalised in 2023 and has now been given effect through the DPDP Rules, which have been formally notified. Collectively, the DPDP Act and DPDP Rules establish India’s comprehensive personal data protection framework, including the legal basis for processing personal data, notice-and-consent requirements, cross-border transfer rules, breach notification obligations, the establishment and powers of the Data Protection Board, and obligations applicable to data fiduciaries, significant data fiduciaries, consent managers, and data processors.

These obligations are subject to a phased enforcement timeline, with various provisions coming into effect over the next 18 months. The full details of the DPDP framework including compliance requirements, business impact on a technology company and enforcement timelines are set out under 7.1 Regulations Applicable to a Technology Company.

The issuer is required to make a public announcement in a daily newspaper of wide circulation within two days of filing the draft offer document with SEBI. This announcement should disclose that the draft offer document has been filed with SEBI and invite comments. See 6.1 Stakebuilding and 6.2 Mandatory Offer.

See 6.12 Securities Regulator’s or Stock Exchange Process.

An acquirer (and any persons acting in concert) is required to make financial disclosures to the shareholders and the target company in the prescribed format.

The public announcement must include the nature of the proposed acquisition, such as the purchase or allotment of shares, or any other means of acquiring shares, voting rights in, or control over the target company.

The detailed public statement pursuant to the public announcement should contain such information as may be specified in order to enable shareholders to make an informed decision with reference to the “open offer”.

The public announcement and the detailed public statement should not omit any relevant information or contain any misleading information.

The duties of directors are contained in the Indian Companies Act, 2013, which inter alia include:

• acting in accordance with the articles of association of the company;
• acting in good faith in order to promote the objectives of the company for the benefit of its members (including minority shareholders of the company); and
• acting in the best interests of the company, employees, and the community.

The board of directors are typically permitted to establish special or ad hoc committees. In line with Table F of the Indian Companies Act of 2013 (which is the model articles of association that a company can adopt), “the board of directors may delegate any of its powers to committees consisting of such member or members of its body as it thinks fit. Any committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may be imposed on it by the board of directors”.

Some of the common committees formed are:

• the audit committee;
• nomination and remuneration committee;
• stakeholders’ relationship committee;
• corporate social responsibility committee; and/or
• investment committee.

Boards are also increasingly establishing data-privacy and competition compliance sub-committees to manage regulatory risks in data & technology-intensive businesses.

A director of a company who has a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company should disclose that and the director should not participate in the matter. In certain cases, ad hoc committees are constituted to deal with the conflicts involved.

The board is required to act in a fiduciary capacity in the interests of the company. Shareholder litigation challenging a board’s recommendation for a merger or acquisition is uncommon, especially when the companies are promoter-driven and the interests of minority shareholders are not significantly harmed by the transaction.

Shareholder litigation would arise where minority shareholders consider the transaction value inadequate, including where there is a conflict of interest or related parties are involved, or where there are disproportionate terms and economic benefits to the various stakeholders. A buyer should ensure that the transaction structure is clear and duly disclosed, and that the consideration paid to the various stakeholders is proportionate to their shareholding.

In promoter-driven companies in India, there is typically an overlap of board and shareholder interests. However, where there are specific considerations and provisions governing directors independent of the company, directors do seek independent advice. A financial advisor typically provides a holistic opinion on the transaction, and the board often resigns following the change in ownership of the company.