India

The principal transaction structures in India are summarised below. The choice is typically driven by a combination of commercial objectives, regulatory considerations, tax efficiency, and execution certainty.

• Share purchases and share acquisitions. These involve acquisition of equity ownership through purchase or subscription of new securities. This remains the most common structure for both private and public M&A transactions in India, given the relative ease of implementation, an established regulatory framework and predictable outcomes.
• Asset purchases and business transfers. Asset transactions may be structured either as:
  • an itemised asset purchase, where specific assets are acquired with the seller retaining the liabilities; or
  • a transfer of an undertaking as a going concern (commonly referred to as a “slump sale”).

An “undertaking” generally refers to a self-sustaining and identifiable business unit within a company. These structures are often preferred in circumstances where a share acquisition is impractical or inefficient — for example, where stamp duty optimisation is a key consideration, or where asset-level transfers offer greater flexibility and ease of execution.

• Mergers, amalgamations and demergers (schemes of arrangement). These are typically implemented through court-approved schemes and involve consolidation or reorganisation of corporate entities, with consideration discharged in the form of shares. Recent amendments to the company law have strengthened the “fast-track” regime permitting certain qualifying mergers to be approved by the central government and not the court, making this route particularly attractive and time-saving. Schemes of arrangement are frequently used for intra-group restructurings and, if appropriately structured, can be tax neutral — an important advantage over other transaction forms.

The M&A market has matured over the years. Ever since the first spate of liberalisation reforms that de-licensed Indian industry and permitted foreign direct investment in several sectors, the progress has been steady and consistent. The M&A ecosystem comprises sophisticated investment professionals, capital markets and market regulators that understand and appreciate macro-economic trends and risks and respond appropriately. Most bulge bracket private equity (PE) and venture capital funds have a substantial presence in India and understand the investment ecosystem.

While the size and depth of the opportunity has increased over the years, India largely remains a consumer-driven market with most industries aligning production capacity to local economic growth trajectories. With the imposition of tariffs and other geopolitical uncertainties, this trend is likely to remain intact for the foreseeable future.

Below are the numbers:

• Deal activity has maintained momentum in 2025, driven by domestic strategic transactions and cross-border investments. While the number of deals has decreased compared to the post-COVID period, total deal value has risen significantly, indicating a clear trend toward larger, higher-value transactions. In the third quarter of 2025, deal values increased by about 37% compared to the previous year, reaching nearly USD 26 billion.
• Foreign direct investment (FDI) has played a significant role in the growth of M&A activity. After a brief slowdown caused by global uncertainties, FDI rebounded strongly, rising to over USD 81 billion in the 2024–25 financial year, representing an increase of approximately 14% to the previous year. The services sector was the top contributor (by 19%), followed by computer software and hardware (16%) sector. Notably, overall FDI into manufacturing grew by 18%, reaching USD 19.04 billion.
• Domestic M&A continued to dominate the market, accounting for over 60% of transactions, reflecting strong balance sheets and consolidation-driven strategies among Indian companies.
• The technology industry has remained at the forefront of the M&A market, driven by the growing digitalisation of industries. In the third quarter of 2025 alone, technology accounted for approximately 120 deals, up from around 100 deals in the third quarter of 2024. Other sectors contributing to the increase in M&A activity include renewable energy (contributing to over USD 8 billion in the first half of 2025), financial services, healthcare (contributing to around USD 2.5 billion across approximately 45 to 50 deals), and energy. In addition, cross-border deals, particularly in the automotive and technology sectors, have further boosted overall market activity.

• Early-stage investors scoring impressive exits. Most early-stage investors, particularly in technology companies, have realised multi-fold returns on their investment through public exits. As a result, the capital markets have been extremely active and robust over the last couple of years. Investors have chosen a public exit to a private exit, through strategic buyers. Recent exits bode well for the maturing of the Indian market.
• Decline in venture capital investments. The post-COVID global monetary tightening has resulted in reduced activity in early-stage investment activity. Investors have turned more cautious for a variety of reasons such as a glut in the market, lack of product differentiation, lack of a clear path to profitability and governance concerns.
• Control transactions. Previously, most PE investors preferred to purchase a minority stake while betting on the incumbent management to effectively manage business and deliver results. This trend has undergone an overhaul with several PE investors deciding to pursue control deals in companies with a strong balance sheet and strategic alignment. This shift also aligns with the fund’s exit timelines, governance standards and disclosure frameworks.
• Introduction of deal value thresholds. The government has introduced an additional layer of anti-trust scrutiny through deal-value thresholds. Under the new rules, a transaction with:
  • (global) deal value crossing INR 20,000 million (approx. USD 270 million); and
  • where the target has substantial business operations in India, is covered under the ambit of the antitrust notification to the Competition Commission of India (CCI).
• Reverse flips. For several years, promoters of start-ups and early-stage companies preferred to set up their holding company in Delaware, Singapore and the Middle East for strategic fund-raising reasons. The India office served as the backbone of global operations given its strong engineering and technical depth. This trend has undergone a change with several Indian start-ups “reverse” flipping to India to take advantage of the vibrant capital markets that offers a clean and efficient exit to early-stage investors.

The outlook in India for the next 12–24 months is one of optimism. India is expected to grow at over 7% in the next couple of years, making it one of the best performing large economies. In addition, the government has promised several regulatory reforms to maintain a strong growth trajectory.  

Regulatory and policy changes

• The FDI limit in the insurance sector has been increased from 74% to 100%. This change will encourage takeovers and attract new international players in the insurance sector.
• The civil nuclear program has been opened up for private sector investment.
• Amendments to the income tax laws aim to simplify corporate taxation, clarify capital gains rules, and support cross-border transactions, which will reduce uncertainty for investors.
• Further, allowing non-government national pension system subscribers to invest up to 100% of their corpus in equity will also fuel long-term domestic investment.
• India’s focus on bilateral trade deals — including the India–UK Free Trade Agreement, the India–U.S. Strategic Trade Partnership, the India–New Zealand Free Trade Agreement and the historic India–European Union Free Trade Agreement — is expected to boost cross-border deals in areas like defence, semiconductors, green energy, agri-tech, and specialised manufacturing.
• Further, banks have now been permitted to extend acquisition finance to non-financial entities (i.e. finance for the acquisition of shares or compulsorily convertible debentures of a target entity or the holding company of the target) where the objective of the borrower is to secure long-term strategic “control” in the target. The control is required to be acquired within 12 months from signing of definitive acquisition documents and may be undertaken through a single or series of transactions.
• New avenues have also opened up with offshore lenders being permitted to provide offshore debt/external commercial borrowing to Indian borrowers to fund the acquisition of unlisted and listed entities.
• Finally, the introduction of bright-line thresholds under Press Note 2 of 2026 (“PN 2”) to determine whether an investment is “beneficially owned” by citizens or entities from land-border sharing countries is expected to bring much needed clarity and revive stalled FDI proposals. Additionally, the announcement of an expedited clearance framework for FDI proposals originating directly from such jurisdictions is expected to unlock significant opportunities, particularly in the manufacturing sector.

Key sectors for 2026

Heightened consolidation is anticipated in financial services, driven by the ongoing pursuit of operational scale. The emerging space and satellite sector is also expected to witness a surge in M&A activity following the 2024–2025 liberalisation of FDI limits, which now allow up to 100% foreign investment in satellite component manufacturing and significant automatic-route participation in satellite operations and launch vehicles as well as in the insurance sector.

Foreign interest shifting

While inbound capital remains strong, there will be a change in the mix of investors. There will be growing interest from sovereign wealth funds, as well as investors from the Middle East and Japan, who are looking for stable, long-term opportunities in infrastructure and manufacturing.

India has a complex body of laws governing M&A, broadly falling into the following categories.

Companies Act, 2013 (CA)

The CA governs mergers and acquisitions involving Indian companies, including cross-border mergers, while transactions involving limited liability partnerships are governed by the Limited Liability Partnership Act, 2008.

Approvals for mergers under the CA may be required from the jurisdictional regional director and/or the National Company Law Tribunal. While non-merger acquisitions may not require approval from these authorities, related actions such as changes in share capital may require approval of the jurisdictional registrar of companies.

Exchange control laws

Foreign investment in India and outbound acquisitions by Indian persons must comply with the Foreign Exchange Management Act, 1999 (FEMA) and the applicable rules and regulations thereunder, including the Foreign Exchange Management (FEM) Non-Debt Instruments Rules, 2019 for inbound investments and the FEM Overseas Investment Rules and Regulations, 2022 for outbound transactions.

The Reserve Bank of India (RBI) is the principal regulator under FEMA and has in turn delegated certain powers to authorised dealer banks. Depending on the transaction, approvals may also be required from the Department for Promotion of Industry and Internal Trade (DPIIT) or relevant sector-specific ministries, typically through the DPIIT single-window portal.

Lastly, if the acquirer is from, or is beneficially owned by, a person resident/from a country sharing land borders with India, PN 2 approval may be required; otherwise, FEMA generally requires only post-transaction intimation to the RBI through authorised dealer banks.

Income tax laws

Mergers and acquisitions must comply with the Income Tax Act, 1961 (“IT Act”) and the rules and regulations framed thereunder. The IT Act sets out several key provisions which must be considered when structuring such transactions, for example:

• In a share acquisition, capital gains tax computation is critical, and the acquisition price must generally be at or above the fair market value under the IT Act, including for global transactions deriving value from assets in India.
• In a business or asset purchase, the transaction must comply with pricing requirements under the IT Act, including the transaction being at arm’s length and conducted at fair value determined as per the provisions of the IT Act.

Most importantly, it must be ensured that the seller has no outstanding tax dues that could entitle the tax authorities in India to challenge the bona fides of the transaction and claim that they have a lien over the assets/shares/business sold by the seller under section 281 of the IT Act. Where the buyer is required to comply with withholding tax provisions, taxes must be suitably withheld and paid to the income tax department, and requisite filings may be required before payment of consideration, with income tax returns filed post-consummation.

Indirect tax laws

Asset sale transactions in particular are subject to goods and services tax and must comply with applicable requirements, which are enforced by the Goods and Services Tax (GST) authorities.

Similar to section 281 of the IT Act, GST laws permit authorities to void a sale where the seller has outstanding tax dues, and buyers may therefore require a no-objection certificate from the indirect tax authorities.

Competition law

India’s antitrust regime is governed by the Competition Act, 2002 and transactions may require approval of the CCI, subject to applicable exemptions such as small target and no change of control. Where required, CCI approval must be obtained before consummation, and strict compliance is necessary to avoid penalties.

Securities laws

Where any party is a listed entity in India, compliance with applicable securities laws is required, primarily under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The key regulator is the Securities and Exchange Board of India (SEBI), and the approvals or intimations required depend on the nature of the transaction.

Laws applicable to specific regions or sectors of operation

In addition to the above, transactions should also comply with region- and sector-specific requirements. For example, approvals from special economic zone or industrial area authorities, RBI for banking and financing entities, and sector-specific regulators such as those for defence and pharmaceuticals.

Share sale transactions

Transactions may involve cash or non-cash consideration; however, where a party is a person resident outside India, strict compliance with FEMA is required, including the following:

• Pricing guidelines:
  • In share sale transactions where the buyer is a person resident outside India and the seller is a person resident in India, the purchase price must not be less than the arm’s length fair market value for unlisted shares.
  • Where shares are sold by non-resident sellers to resident buyers, the price must not exceed the fair market value.
  • No FEMA pricing guidelines apply to transactions involving only residents or only non-residents, subject to any applicable tax law requirements.
• Deferred consideration norms. Where shares of an Indian company are acquired by a non-resident buyer from resident sellers, strict norms apply to deferred consideration: at least 75% of the purchase price must be paid at closing, with the balance of 25% (as adjusted under the agreement) payable within 18 months of signing. In all cases, after any indemnity or other adjustments, the price per share paid must not be less than the fair market value.
• Payment of consideration via ordinary banking channels.
  • As a norm, a foreign buyer acquiring shares of an Indian company from resident sellers must pay consideration through normal banking channels, typically evidenced by SWIFT MT 103 messages (standardised SWIFT message used to confirm internally wire transfers between banks) and a foreign inward remittance certificate.
  • Share swaps and discharge of liabilities to non-residents, including conversion of external commercial borrowings into equity, are permitted in limited circumstances subject to FEMA compliance.
  • Further, where the buyer is a foreign-owned or controlled company in India, such investment is treated as downstream foreign investment and is subject to applicable conditions. Accordingly, while both cash and non-cash consideration are permitted, the structuring of consideration must strictly comply with FEMA requirements.
• Asset/business purchase transactions. In asset/business purchase transactions, parties have greater flexibility in structuring cash or non-cash consideration; however, where the buyer is a non-resident, consideration must be paid through internal accruals or foreign investment from the parent entity.

It is essential for a buyer to conduct comprehensive due diligence prior to an acquisition or merger, covering the following aspects:

• Corporate due diligence, to cover the share capital/ownership structure, compliance with applicable laws, regulatory and other licences obtained by the target entity, validity of material contracts, and litigations, amongst others. While electronic searches pertaining to litigation and compliance with certain laws can be conducted, such searches may not be completely accurate as records may not be electronically maintained, hence the buyer should ensure that independent due diligence is conducted.
• Financial and tax due diligence are also conducted, focusing on compliance with accounting standards and tax laws.
• If the target owns real estate, title due diligence is conducted to verify the title/ownership of the target to the land and property, including ensuring that there are no third-party encumbrances on such real estate. Such title due diligence is often extensive, involving a review of the title of the target to the property for a period of 30+ years.
• It is also common for buyers to conduct environmental, social, and governance (ESG)/employment law and compliance due diligence to identify any gaps in compliance with employment laws or in corporate governance.
• Depending on the sector in which the target operates, environmental impact due diligence may also be conducted to ensure compliance with environment laws.
• Buyers may also conduct some due diligence of the sellers and the sellers’ group, to protect from risks such as reputation risks.
• Buyers may also conduct due diligence with respect to the ease with which the buyer will be able to integrate the target into its own operations post the acquisition transaction.

Parties increasingly rely on W&I insurance due to lower costs and seller constraints such as fund life limits; given that indemnity survival in India is typically three to seven years, buyers must ensure adequate W&I coverage where seller recourse may be limited.

Where W&I insurance is procured, buyer due diligence must be comprehensive to satisfy insurers, and parties may negotiate cost-sharing. Sellers may remain liable for uninsured losses, including claims below thresholds or excluded from coverage.

As noted above, buyers must comply with FEMA and applicable exchange control laws in India and conduct appropriate due diligence.

In India, the key triggers which necessitate public disclosure or information to be put out in the public domain are as follows:

• Stock exchange disclosure by a listed entity as prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. This requires disclosure of basic information about M&A transactions/business combinations, such as identity of parties, industry of operation, transaction objective, consideration of the transaction, and so on. The typical triggers for disclosure under this regulation are as follows:
  • Board approval related to the transaction.
  • Execution of binding definitive documents.
  • Any major regulatory step/approval related to the transaction.
  • Closing/consummation of the transaction.
• Information shared with the CCI, which is hosted on the regulator’s website (thus becoming public) is a second category of disclosure. In the event the transaction requires the notification of and approval by the CCI, typically its website will publish a non-confidential summary of the merger control application. This includes basic details such as parties to the transaction, nature and purpose of transaction, the relevant market for the transaction, products/services of the parties, and so on. In other words, sensitive aspects of the transaction do not get disclosed in the public domain in the first instance. However, in the case that the transaction requires a higher degree of scrutiny (e.g. the CCI considers that the transaction under consideration might cause appreciable adverse effect to competition) it would entail the parties having to publish more information in leading newspapers and parties’ websites for interested third parties/public consultation as well.
• In the case of due diligence involving a listed entity, there are certain conditions to be fulfilled under the SEBI (Prohibition of Insider Trading) Regulations 2015. This may entail publishing some additional information about the relevant listed entity in the public domain (such as the company’s website).
• There are certain sectors that mandate additional disclosures on account of approval from the sectoral regulator. For instance, non-banking financial companies (NBFC) are regulated by the RBI; change of control of an NBFC requires prior RBI approval. Under certain conditions, a change of control can require prior public disclosure and newspaper advertisement regarding the transaction.
• There are also disclosure requirements that emerge from the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011 (“Takeover Code”). Some of the key triggers are listed below:
  • An open offer process entails disclosures through public announcement, letter of offer, public statement, advertisements/disclosures after the public offer closure, and certain other ongoing disclosures.
  • Any acquisition of 5% or more in a listed entity (by a person or persons acting in concert), would trigger a disclosure requirement, where shareholding and any corresponding voting rights acquired get disclosed. Thereafter, any 2% or more in shareholding or voting rights would trigger disclosure requirements
  • Creeping acquisitions, where any person holding 25% or more in the listed entity acquires 5% or more (or 2% change, where relevant) in such entity during a financial year, the same would mandate disclosures.

It must be noted that the disclosures discussed above are time bound.

Key procedural requirements

Open offers in the case of public takeover are regulated substantially under the Takeover Code. While there can be voluntary open offers as well, the mandatory open offer trigger is when an acquirer exceeds 25% of shares/voting rights or acquires control of the listed entity. The key steps involved are listed below:

• Appointment of a merchant banker for managing the public offer/open offer.
• Public announcement in newspapers.
• Opening of escrow account.
• Detailed public statement publication.
• Filing of draft letter of offer to SEBI for its comments (and sending to target company and stock exchanges).
• Review of SEBI comments once received.
• Issuance of formal letter of offer within statutory timelines.
• Public shareholders tendering period.
• Acceptance/proportional acceptance (proportional acceptance is relevant when not all tendered shares need to be accepted by the acquirer).
• Acquisition of the shares and payment.

Competing offers

It may be noted that the Takeover Code permits competing open offers from a person other than the original acquirer within a statutorily permitted period after the original open offer is made. This provision is detailed in the Takeover Code in the best interests of the public shareholders. In addition, it must be noted that, though heavily regulated, hostile takeovers are also not prohibited under the Takeover Code.

Exclusivity and break fee

The Takeover Code would prevail over an exclusivity arrangement under private contract between the acquirer and company/promoters/selling shareholders, if any; although a party that has contractually agreed to exclusivity may find it difficult to formally precipitate a white knight offer. However, the competing open offer is possible only after the announcement of the acquirer’s open offer, and it can also be made by third parties not bound by exclusivity.

While an open offer transaction may contain break fee provisions, the same could become subject to close SEBI scrutiny; there may be comments or modifications that SEBI may prescribe to the arrangement, especially if the break fee seems high/disproportionate. It may also be noted that where the break fee is payable to a non-resident person/entity by a resident Indian entity, it may require prior approval from the RBI.

It is also important to mention that while the CA that governs all companies (and not just public M&A) has provisions that closely govern certain minority squeeze-out and minority buyout situations, the Takeover Code itself does not prescribe minority squeeze-out provisions. The open offer process itself is intended to be a transparent process whereby a minority shareholder is allowed to exit at a fair price rather than get squeezed out by the acquirer.

The most common form of dispute resolution that is documented by transacting parties is institutional arbitration. The most commonly drafted arbitral institutions involving an Indian transacting party are the Singapore International Arbitration Centre, the London Court of International Arbitration and the International Chamber of Commerce. While not institutional arbitration, there is also strong preference by Indian parties to have an arbitration clause governed by the Indian Arbitration and Conciliation Act of 1996. In the first instance, courts are less preferred, though an oppression and mismanagement proceeding can be introduced by qualifying shareholders with the National Company Law Tribunal (rather than in arbitration).

Emerging technologies have had a two-fold impact on the Indian M&A industry:

• From a deal management perspective, deal viability as well as due diligence has started seeing utilisation of artificial intelligence.
• The creation of new industries and entities for M&A and investment (such as fintech, AI, blockchain, health-tech and other tech).

There are a few regulatory changes that can affect M&A in India. Key aspects to consider include:

• The dematerialisation of shares, which mandates that share transactions of most companies (barring a few exceptions) should take place in dematerialised form.
• The ambit of fast-track mergers has been widened, which can speed up any intragroup restructuring prior to or as part of a third-party acquisition
• Changes in data privacy laws, which could entail additional compliance steps during due diligence.