Mergers and Acquisitions in India

Mergers and acquisitions (M&A) have played a pivotal role in shaping India’s economic landscape, reflecting the nation’s evolving regulatory environment, strategic corporate decisions, and its integration into the global market.

According to Equentis, investment advisory company based in India, in 2024, India’s mergers and acquisitions (M&A) landscape experienced significant growth, with total deal values reaching approximately $109 billion, up from $79 billion in 2023.

This surge was driven by robust corporate strategies and increased investor confidence. Notably, Indian corporations contributed $48 billion to the total M&A activity, nearly doubling their participation from $26 billion in the previous year. Key sectors that saw heightened M&A activity included technology, industrials, infrastructure, and retail, reflecting evolving market dynamics and diversification strategies.

However, it’s important to note that different sources report varying figures. For instance, Deloitte reported that M&A deal value in India was $136 billion in 2023, a contraction of 27 percent from the previous year.

Additionally, Forbes India noted that until November 2024, deal values had reached $36.14 billion, marking a 43.2 percent increase from $25.24 billion in 2023.

These discrepancies may arise due to differences in data collection periods, definitions of M&A activity, or reporting methodologies.

Regulatory Landscape: India vs. Global Counterparts

India’s regulatory framework governing M&A activities is distinct in several respects:

• Foreign Direct Investment (FDI) Policies: India maintains sector-specific FDI caps and restrictions. For instance, while 100% FDI is permitted under the automatic route in sectors like IT and infrastructure, others like defense and media have caps and require government approval. This contrasts with countries like Singapore, which offer more liberal FDI regimes across sectors.
• Competition Commission of India (CCI): Established to prevent anti-competitive practices, the CCI ensures that M&A deals do not lead to market monopolies. This is akin to antitrust bodies in the U.S. and EU but operates within the unique contours of India’s market dynamics.
• Taxation Policies: India’s tax implications for M&A, such as capital gains tax and stamp duty, differ from countries like the UK, where certain M&A transactions might qualify for reliefs, making the process more tax-efficient.

Frequency and Drivers of M&A Activities

M&A activities in India have seen fluctuations influenced by economic cycles, policy reforms, and global trends:

• Economic Liberalization: Post-1991 reforms opened up the economy, leading to a surge in M&As as both domestic and foreign companies sought to capitalize on new opportunities.
• Market Consolidation: Industries like telecommunications and banking have witnessed M&As aimed at consolidating market share and achieving economies of scale.
• Technological Advancements: The tech boom has driven acquisitions, with companies seeking to bolster digital capabilities and innovation.

Historical M&A Activities and Notable Deals

India’s M&A landscape boasts several landmark deals that have reshaped industries:

1. Tata Group’s Acquisition of Tetley (2000): Tata Tea’s £271 million purchase of UK-based Tetley marked one of the earliest significant overseas acquisitions by an Indian company, aiming to gain a global footprint in the tea industry.
2. Bharti Airtel and Zain Telecom (2010): Bharti Airtel’s $10.7 billion acquisition of Zain’s African operations was driven by the ambition to expand into the African market, though it faced challenges due to diverse market dynamics.
3. Vodafone’s Acquisition of Hutchison Essar (2007): Vodafone’s $11.1 billion purchase of a controlling stake in Hutchison Essar marked its entry into the Indian telecom market, aiming to tap into the burgeoning mobile subscriber base.
4. Sun Pharmaceuticals and Ranbaxy Laboratories (2014): The $4 billion acquisition aimed to create India’s largest and the world’s fifth-largest specialty generics company, focusing on expanding global reach.
5. Flipkart’s Stake Sale to Walmart (2018): Walmart’s acquisition of a 77% stake in Flipkart for $16 billion was a strategic move to enter India’s e-commerce market, positioning against competitors like Amazon.
6. L&T’s Acquisition of Mindtree (2019): Larsen & Toubro’s hostile takeover of Mindtree for $1.2 billion aimed to strengthen its IT services portfolio, though it faced resistance from Mindtree’s founders.
7. Bank of Baroda’s Merger with Dena Bank and Vijaya Bank (2019): This amalgamation created India’s third-largest lender, aiming to enhance operational efficiency and capital base.
8. Reliance Industries’ Acquisition of Network18 (2014): The $680 million deal aimed to bolster Reliance’s presence in the media and entertainment sector.
9. HDFC Bank and HDFC Ltd Merger (2022): Valued at $40 billion, this merger aimed to create a financial services behemoth, integrating banking and housing finance services.
10. Tata Steel’s Acquisition of Corus (2007): The $12 billion deal aimed to position Tata Steel as a major global steel producer, though it faced challenges due to economic downturns.

Recent Developments in 2024

The year 2024 witnessed significant M&A activities:

• Disney and Reliance’s Entertainment Merger: In February 2024, Disney and Reliance Industries agreed to merge their local entertainment businesses, creating an $8.5 billion entity. This strategic move aimed to consolidate their positions in India’s competitive media landscape.
• Ambuja Cements’ Acquisition of Orient Cement: On March 4, 2025, Ambuja Cements received approval from the Competition Commission of India to acquire Orient Cement for $451 million. This acquisition is part of Ambuja’s strategy to challenge industry leaders like UltraTech Cement.

Successes and Challenges

While many M&A deals have achieved strategic objectives, others have faced hurdles:

• Success Stories: Tata’s acquisition of Tetley allowed it to become a global player in the tea industry. Similarly, the Flipkart-Walmart deal provided Walmart a strong foothold in India’s e-commerce sector.
• Challenges: Bharti Airtel’s acquisition of Zain’s African operations faced profitability issues due to diverse market conditions. Vodafone’s entry into India through Hutchison Essar led to prolonged regulatory and tax disputes.

Strategic Decisions and Rationales

The driving forces behind these M&A activities include:

• Market Expansion: Companies seek to enter new markets or strengthen their presence in existing ones.
• Diversification: Firms aim to diversify their product offerings to mitigate risks associated with specific industries.
• Operational Synergies: Mergers help companies achieve cost efficiencies and streamline operations.
• Regulatory Compliance and Adaptation: Adapting to evolving legal and regulatory frameworks influences M&A decision-making.

Mergers and acquisitions in India continue to shape the corporate landscape, driven by regulatory changes, market dynamics, and strategic corporate goals. As Indian businesses strive for global competitiveness, the M&A sector remains a key driver of economic transformation. With recent mega-mergers setting the stage for future developments, the outlook for M&A in India remains strong, offering opportunities for both domestic and foreign investors.