Impact of Technological Disruption on M&A: AI, Blockchain, and Digital Transformation Deals in India.

India’s mergers and acquisitions (M&A) landscape is experiencing a major shift thanks to rapid technological advances. Technologies like artificial intelligence (AI), blockchain, and digital transformation are not only changing how businesses operate but also reshaping deal-making strategies, valuations, and the regulatory environment. As India emerges as a global technology hub, these innovations are driving a significant increase in M&A activity, especially in sectors such as IT, fintech, pharmaceuticals, and deep tech, making 2025 a pivotal year for tech-focused consolidation.

AI: Revolutionizing Deal Sourcing, Due Diligence, and Strategic Decisions

Artificial Intelligence is a major driver of India’s M&A growth, supported by $1.25 billion in government funding and private initiatives like Reliance’s JioBrain. The AI market is expected to reach $17 billion by 2027, fueling increased deal activity.

AI is changing M&A by automating potential target identification, accelerating due diligence processes, and more accurately quantifying risks. GrowthPal and similar platforms act as virtual investment bankers to help acquirers surface deals in weeks, rather than months, that align with their strategic goals. Resultantly, there are more micro-fit and bolt-on acquisitions, particularly in IT sectors where AI insights help evaluate technology compatibility plus market potential.

Cross-border M&A will also be able to leverage AI’s strengths because this kind of deal is extremely sensitive to various complexities over the regulatory regimes, assessing geopolitical risks, and the level of public sentiment that has therefore injected a lot of uncertainties into international deals. But equally important, the use of AI has to be balanced with human judgment since it brings new challenges on data inaccuracies, algorithmic biases, and privacy issues.

Blockchain and Cryptocurrency: Emerging Frontiers for Strategic Consolidation

India’s strong cryptocurrency adoption, despite regulatory uncertainty, has fueled M&A activity in blockchain and crypto, as seen with CoinDCX’s 2024 BitOasis acquisition. Ongoing regulatory developments—like SEBI’s proposed frameworks and tax rules—could further legitimize cryptocurrencies and strengthen India’s dynamic deal-making environment.

The potential that blockchain technology represents – namely increased transparency, security and efficiency around transactions in the provision of financial services – fuels strategic acquisitions and consolidations. A rapid increase in blockchain-based financial products (e.g. exchange traded products; cryptocurrency asset management) should support M&A activity as these companies seek to gain scale and differentiation within a quickly evolving space.

Digital Transformation: Driving Sectoral Consolidation and New Deal Structures

Digital transformation is driving sector-wide consolidation and new deal structures Consolidation across all sectors is becoming a prevalent issue. Companies are acquiring digital-first startups and tech firms to drive innovation, improve customer experience and create competitive moats. Changes in regulation, reflective of the acceleration of tech-deals and preserving competition in digital markets (such as deal value thresholds in the new rules from the Ministry of Corporate Affairs as well as greater scrutiny by the Competition Commission of India, or "CCI") will affect deal structures, timings and compliance pathways.

Legal and Regulatory Developments Shaping Tech M&A

1. New Merger Control Regime: Deal Value Thresholds and Expanded Scrutiny

A significant legal development in 2024 was the introduction of the Deal Value Threshold (DVT) under the Competition Commission of India (Combination) Regulations. Now, any transaction exceeding INR 2,000 crores (about USD 238 million) involving targets with substantial Indian operations requires CCI approval, even if the target’s turnover or assets are below traditional thresholds. This change closes a key regulatory gap, particularly impacting high-value deals in the digital and pharmaceutical sectors that previously avoided scrutiny.

Additionally, the Revised Exemption Rules have added complexity by setting new criteria for exemption eligibility. Factors such as access to commercially sensitive information and overlaps with portfolio companies are now closely examined. Minority investments and interconnected transactions, especially in digital industries, face increased CCI scrutiny, making early regulatory engagement and strong compliance strategies critical for dealmakers.

2. Data Privacy, IP and Cross-Border Considerations

   
   

With rising AI and digital assets, M&A due diligence must prioritize data privacy and IP rights, ensuring compliance with laws like the DPDP Act 2023 and carefully addressing AI-related IP issues.

Cross-border M&A and particularly tech transactions present additional challenges, but those processes can be further complicated due to FEMA laws, RBI approvals, and restrictions on global data transfers. For example, although the Amazon–Future Retail litigation (2021-2022), and Piramal–DHFL merger (2023) had nothing to do with IP or data privacy, the issues around disputes about governing rights, protecting creditors, and enforcing foreign awards — dealt a blow to the deal’s implementation and operationalization.

Conclusion

In my view, AI, blockchain, and digital transformation are revolutionizing India’s M&A scene, offering immense opportunities but demanding vigilant oversight and regulatory adaptation. Success in this evolving landscape will depend on how well dealmakers harness these technologies while skillfully navigating the complex legal and compliance environment.

This article is authored by Krishna Sharma. He was among the Top 40 performers in the Quiz Competition on Mergers and Acquisitions organized by Lets Learn Law.