India: A Corporate/M&A: New Delhi-Based Overview

Indian M&A activity in 2026 is treading a cautious path on account of various geopolitical factors including ongoing global conflicts, an energy price hike, supply chain disruptions and high inflation. The Indian rupee has faced tremendous pressure and India’s GDP growth forecast has been reduced by various global credit rating agencies.

The Indian government has attempted to mitigate these pressures by undertaking various reforms. These include relaxations to the exchange control norms on foreign investments, liberalisation of the debt landscape and introduction of new consolidated labour codes.

Foreign Investment From Land Bordering Countries

The Indian government has relaxed the foreign direct investment regime pertaining to investments from India’s land bordering countries (LBCs). The threshold for determining “beneficial ownership” of LBC investors has been clarified and the approval requirement in respect of investments made by natural persons from LBCs is now applicable to only “citizens” of LBCs.

The Indian government has also announced its intention to provide expedited clearance for investments from LBC investors in specified sectors (manufacturing of capital goods (including electronic capital goods), electronic components, polysilicon and ingots/wafers, advanced battery components, rare earth permanent magnets and rare earth processing), provided that the majority shareholding and control of the Indian entity should be with resident Indian citizens and/or resident Indian entities owned and controlled by resident Indian citizens. This is a calibrated relaxation designed to encourage non-controlling foreign direct investment from LBC investors in sectors that require deep technological expertise while ensuring that the ownership and control remain with resident Indian citizens.

Share Swaps

With the recent relaxation of Indian exchange control norms on cross-border share swaps, there has been an increase in acquisitions through share swap structures. By using stock as currency, the acquiror is often able to offer a better valuation to the target while preserving its cash position. Share swap structures are also seeing increased adoption in venture-backed companies whose valuations may have dipped since the 2021 bubble - it provides an exit pathway to investors from such companies that may be struggling to otherwise provide an investor exit while enabling a competitor to consolidate its market position through a cashless bolt-on acquisition, often in the lead up to a listing.

Reverse Flips

India is witnessing a growing trend of “reverse flips”, where foreign holding companies of Indian businesses are re-domiciling their holding structure back to India, as a precursor to listing on the Indian bourses. This is driven by a confluence of factors including increased confidence in India’s capital markets with better listing and liquidity prospects, a deepening investor base and liberalisation of the regulatory regime. The government reforms to facilitate this internalisation have included expansion of the “fast-track” merger route (which does not require a court process), to cover inbound cross-border mergers of foreign holding companies with their wholly owned Indian subsidiaries as well as easing the exchange control framework pertaining to share swaps. The last year saw multiple unicorns “redomicile” back to India, with ‘Groww’ even completing a successful India listing following its reverse flip to India; this trend is expected to continue with many more in the pipeline.

Ownership Transition in Family Businesses

Many family-owned Indian businesses are facing a succession/ownership transition phase, resulting in numerous opportunities for control/buyout deals for private equity investors. In some instances, the family may do a phased sell-down and retain a residual stake that allows them to participate in the valuation upside that the private equity investor is able to realise as they institutionalise the business and leverage their global network, capital and expertise to drive operational efficiencies and value creation.

Domestic Capital and Consortiums with PE

The Indian deal landscape has seen an increased flow of domestic capital, with Indian family offices emerging as a meaningful source of capital. There is also a growing trend of Indian families/conglomerates joining hands with marquee private equity investors to form consortiums, as they eye large acquisitions across various asset classes. The recent takeover of the sports franchises in Indian Premier League and the investment in Haier India are good examples of these trends.

Auction Processes

There is an increased adoption of auction processes in respect of high-quality Indian assets across sectors. This has ensured value unlocking through market-discovered pricing on the back of a competitive process.

Auction processes are being run with clear seller-defined baseline positions, limited buyer walk-away rights, tight negotiation timelines, and with deal certainty being paramount. Parties are also increasingly seeking warranty and indemnity (W&I) insurance to backstop risks with limited recourse to the sellers.

Acquisition Financing

Significant relaxations to India’s external commercial borrowings (ECB) landscape have been announced recently, including higher borrowing thresholds and allowing ECBs to be structured at prevalent market rates. Further, Indian borrowers are now allowed to utilise ECB for acquisition of control with the condition that the transaction is for strategic purposes (ie, creating long-term value rather than short-term gains).

On the domestic front, Indian banks are also being allowed to extend financing up to specified limits to acquirers for acquisition of control of domestic and foreign entities, where the objective is to secure long-term value for the acquirer subject to it meeting prescribed net-worth, profitability and credit rating criteria.

These reforms have opened new avenues for acquisition financing, which will serve as an impetus for M&A activity for Indian companies, particularly in the mid-market segment.

Outbound M&A Momentum

Indian companies are expected to remain active in their pursuit of overseas acquisitions in sectors/assets that are strategically important and that will help them “move up” the supply chain. The primary drivers for overseas M&A activity will be acquiring IP and R&D capabilities, gaining access to overseas markets/consumers, accelerating global expansion and competitive positioning. While offshore debt continues to remain a key source of financing overseas acquisitions, the healthy balance sheets of Indian companies will encourage them to deploy cash from internal accruals to finance these acquisitions.

What to Expect Going Forward

While M&A deal volumes have witnessed significant growth between January and April 2026, deal values have declined on the back of reduced ticket sizes for private equity deals, global uncertainty and volatile market conditions. Despite heightened global volatility, Indian M&A deal activity is poised to remain resilient based on India’s strong fundamentals and favourable demographics, coupled with a slew of legal and policy relaxations as well as the announcement of India’s trade deals with multiple countries.