Key facts
- Rothschild & Co's Aalok Shah says Indian firms are cautious on AI M&A
- Indian companies avoiding large AI acquisition bets unlike US peers
- Concerns include high valuations, integration risk, and fast-changing technology
- Strategic implications for India Inc's long-term global competitiveness
Indian corporates are holding back on AI-related mergers and acquisitions, choosing watchfulness over the dealmaking frenzy seen in Western markets, Rothschild & Co's Aalok Shah told Business Standard. The assessment from one of the world's leading independent advisory banks offers a ground-level view of where India Inc's boardrooms actually stand on the AI investment question.
The caution is multi-layered. AI company valuations globally have been elevated, making large acquisitions expensive and the return-on-investment calculus difficult to justify to boards and shareholders. There is also the question of integration — bringing an AI-native company into a traditional Indian conglomerate or IT services firm requires cultural and operational alignment that is far from guaranteed. And with the technology itself evolving at a rapid pace, there is a real risk of overpaying for capabilities that could be replicated internally or rendered obsolete within a few years.
This contrasts sharply with the posture of major US technology companies and some European firms, which have made significant AI acquisitions and investments — including billion-dollar bets on foundation model developers and AI infrastructure providers — in the past 18 months.
For India Inc, the caution could be a double-edged sword. On one side, avoiding overpriced acquisitions at the peak of an AI hype cycle is prudent financial management. On the other, the window to acquire AI talent, IP, and market position at a manageable scale may be narrowing. How Indian firms navigate this tension will have long-term consequences for their ability to compete globally in an AI-first economy.