India: A Corporate/M&A: The Elite Overview
Selective Confidence in a Shifting Global Order
Introduction
Amidst an increasingly fractured geopolitical order marked by trade friction, tariff wars and AI-driven supply chain rewiring, the Indian transactional ecosystem in 2025 proved to be a dynamic hub for global capital, albeit one that has yet to achieve full maturity. Simultaneously, Indian corporates expanded their foray into global markets beyond mere opportunistic acquisitions to a strategically driven pursuit of technology, engineering capabilities and established portfolios.
By the end of 2025, India's aggregate M&A deal value (domestic, inbound and outbound) climbed to USD123.8 billion, an 18% uptick from 2024 (even as deal volumes edged down by approximately 3%). This remarkable growth was propelled by strategic capital infusion and a slew of megadeals from Japan and the Middle East. Similarly, outbound cross-border deals contributed significantly to the 2025 story, increasing from USD5.1 billion in 2024 to USD13.7 billion in 2025 (representing 39% of the year’s total cross-border deal value).
The story in deals
Despite a historical preference for efficient, large and predictable investments, new-era investors from the Asian continent are actively rebalancing their portfolios away from Europe and North America. India’s geographical proximity, large diaspora base, continued engagement in bilateral trade negotiations and strong China-plus-One positioning have established it as a compelling supplementary destination.
In fact, even as net Japanese investment flows into China dropped from USD12.5 billion in 2021 to USD1.7 billion in 2025, Japanese investment into India rose from USD3.7 billion to USD7.6 billion over the same period.
The Indian banking and financial services sector spearheaded this regional M&A drive in 2025, with Sumitomo Mitsui’s USD1.58 billion acquisition of an approximately 20% stake in Yes Bank, IHC’s USD1 billion investment in Sammaan Capital, Emirates NBD's USD3 billion acquisition of a controlling stake in RBL Bank, Mizuho’s acquisition of an approximately 70% stake in Avendus Capital for USD700 million and MUFG’s USD4.4 billion minority stake in Shriram Finance – the largest cross-border financial services transaction in India.
Long-term foreign strategic belief in India, the “made in India” story and the growth opportunities offered by India’s market was evidenced by Schneider Electric investing USD6.4 billion to acquire a minority interest held by Temasek in its India business, a large part of which was acquired jointly from L&T in 2020 and saw spectacular growth in a five-year period.
On the outbound front, Tata led the way with Tata Motors’ USD4.45 billion acquisition of Iveco's commercial vehicle business and TCS’s USD700 million acquisition of Coastal Cloud. Coforge announced one of the largest AI-focused Indian acquisitions, a USD2.35 billion deal for US-based digital engineering firm Encora, while Sun Pharma followed suit with its USD11.75 billion acquisition of Organon in early 2026.
These transactions demonstrate that India’s Asian peers as well as global investors are primed for strategic engagement with Indian markets, especially its financial services, industrial and energy sectors, while the diversity of outbound sectors (IT, pharmaceuticals, automotive and industrials) reflects the depth of Indian corporates’ global ambitions and their drive to build long-lasting, resilient international operations.
This deal momentum, however, is not fuelled by market forces alone. Deal-making is often the result of timely and suitable regulatory reforms, aimed at market liberalisation, ease of doing business and economic incentives. This includes regulatory reforms introduced during 2025 – targeting foreign borrowing, acquisition financing and sectoral liberalisation – which lay the groundwork for a structurally integrated deal-making environment.
ECB framework overhaul
In a development likely to bolster hybrid and structured inbound M&A, the Reserve Bank of India (RBI) rationalised the foreign borrowing framework, introducing a largely uniform (and materially lowered) minimum average maturity period of three years and almost entirely abandoning the all-in-cost ceiling in favour of fully market-determined pricing – changes that have generated genuine enthusiasm from foreign investors, particularly private equity players.
Acquisition financing by banks
After years of regulatory reticence, the RBI has introduced a framework for raising acquisition financing of up to 75% from domestic banks for control-based strategic transactions, both domestic and foreign. This flexibility is only available for targets that are not operating in the financial sector.
The framework mandates strict target net worth, profit track record, credit rating and security requirements for availing such financing. Acquirers are also required to maintain meaningful “skin in the game” via a 3:1 debt-to-equity ratio.
Implementation of the amendments has been deferred to July 2026. Once operative, these reforms are expected to reduce the cost of capital for domestic acquirers – and, given the surge in outbound M&A, could provide a competitive edge to Indian deal-makers.
100% FDI in insurance:
Among the most transformative sectoral reforms of the year, the Indian government opened up the insurance sector to 100% FDI under the automatic route. Other reforms were also implemented, such as increasing the threshold for transactional approval from the sectoral regulator from 1% to 5% and reducing the net owned fund requirement for foreign reinsurance branches from INR5,000 crore to INR1,000 crore. These amendments should cause an immediate uptick in inbound M&A (especially takeovers) in this sector.
Press Note 2 of 2026
Indian regulators revoked Press Note 3 of 2020 – initially rolled out to curb opportunistic takeovers during the COVID-19 pandemic – under which any foreign investment with “beneficial ownership” from a land-bordering country required governmental approval. The undefined scope of beneficial ownership had led to divergent market practices and was of particular concern to private equity investors.
Press Note 2 of 2026 replaces this with a clear test for beneficial ownership, importing the framework under the Prevention of Money Laundering Act, 2002, and exempting non-controlling interests of up to 10% from prior FDI approval. However, mandatory disclosure of even sub-10% interests from land-bordering countries in all FDI transactions introduces a new compliance burden, particularly for private equity funds balancing regulatory obligations with preserving the privacy and safety of their investors.
Tiger Global and the road ahead
While 2025 brought with it encouraging trends in deal-making (especially with growing capital inflows from foreign investors, a significant increase in domestic investment and helpful regulatory reform), the contentious ruling of the Supreme Court in the Tiger Global matter in January 2026 has dominated recent India headlines. The apex court held that Tiger’s Mauritian investment vehicles lacked genuine commercial substance, that a tax residency certificate is not ipso facto a defence against anti-avoidance scrutiny and that treaty protection (including grandfathering and limitation-of-benefits clauses) does not extend to indirect share transfers.
In doing so, the Supreme Court of India adopted the “substance over form” approach expounded by the Judicial Anti-Avoidance Rule (JAAR) for testing treaty eligibility in India's international tax jurisprudence, setting aside the “grandfathering” policy benefit of not applying the General Anti-Avoidance Rules (GAAR) to investments made prior to 2017. This has created undesirable uncertainty for investments, echoing concerns first raised during the Vodafone experience many years ago.
Whilst the government was quick to issue guidance to tax officials to not apply GAAR to other pre-2017 investments, the outcome for Tiger Global via the taxation of capital gains earned from an exit that was, at that time, India’s largest FDI transaction (Walmart’s acquisition of Flipkart) has had a negative impact, with foreign investors being understandably concerned with uncertainty via enforcement of tax rules (which has largely not been an issue post-Vodafone until the recent ruling).
Against the backdrop of a depreciating rupee, persistent global energy concerns and ongoing geopolitical conflict, investor confidence will depend in large measure on regulatory and tax certainty to attract investment – especially FDI – as well as on changes to the existing tax regime.
As the Economic Survey of 2025–26 recently tabled before Parliament underscores, sustained policy reform remains imperative to preserve India’s competitiveness as an investment destination. The government’s response in 2026 will be critical. India’s deal-making credentials remain compelling; the challenge now is to match that economic promise with the regulatory predictability that long-term investors require.