Indian Law: Why India is Sizzling on Mergers and Acquisitions

 The Indian law on mergers is one that is gaining great momentum. Section 2 (1A) of the Income Tax Act, 1961, defines amalgamation as merger of two or more companies, to form one company. Acquisition itself is defined as a process when a company takes-over another company, through mutual agreement. Spanning several decades now, it is clear that this business trend is soaring in India. Mergers and acquisitions have gained substantial importance and relevance in the Indian corporate world. 

Increased competition in the global market and other challenges generated due to economic reforms, since 1991, prompted top Indian companies to opt for mergers and acquisitions due to the following advantages:
  • Favorable government policies
  • Buoyancy in economy
  • Additional liquidity in the corporate sector
  • Dynamic attitudes of Indian entrepreneurs 

Indian Law: Competition between India and China in Merger and Acquisition Deals

 
In the highly competitive domain of mergers and acquisitions, India is undergoing considerable momentum. Here are some prominent sectors in India that gained from such mergers and acquisitions:
  • Telecom Industry
  • Finance Industry
  • FMCG Industry
  • Construction Materials Industry
  • Automobile Industry
  • Steel Industry  
In 2007, Merger and Acquisition deals worth $100 billion took place in India, which is more than double the amount generated in 2006.  However, in 2009, India witnessed drastic fall in International Merger and Acquisition deals but picked up pace again in 2010.
 
Another report in 2010 by Dealogic shows that India emerged as the world’s second most sought-after country, after China, among the BRIC (Brazil, Russia, India and China) nations. Mergers and acquisition deals worth $ 2.8 billion, have been finalized in the first half of 2010 itself. However, China has surpassed India, by sealing more competitive merger deals worth $8.3 billion.  
 
The year 2010, industry experts agree, has marked the highest number of mergers and acquisitions historically. More expectations are now set on how this high activity will translate into a positive growth in current transactional values in this competitive domain.
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