India’s year-to-date mergers and acquisitions deal value fell more than 19% to $95.5 billion from $118.5 billion a year earlier, according to data compiled by LSEG. Despite the drop in overall volume, dealmaking remains resilient as transactions are driven by strategy rather than financial engineering, Reuters reported.
The total number of M&A deals remained little changed from the previous year. Rahul Saraf, Citi’s head of investment banking for India, noted that the flat deal count indicates market selectivity rather than a diminished appetite among investors.
Strategic Deals Outpace Financial Engineering
“I’m not seeing anybody trying to be cute on financial engineering or investments such that they can extract a little bit more – (it is) much more strategic play,” Saraf told the Reuters Global Markets Forum. He pointed to strong activity across the healthcare, consumer, infrastructure, and technology sectors, adding that promoters are increasingly open to consolidation and dilution.
Foreign portfolio investors sold a record $32.56 billion of Indian stocks this year as of October 26, according to data from the National Securities Depository. The benchmark Nifty index sits nearly 14% below its record high set in January, underperforming its emerging market and Asian peers.
Currency fluctuations have played a minor role in recent transactions. Saraf described a 1% to 2% currency move as a variable rather than a major factor for strategic deals, though such shifts carry more weight for investments driven primarily by financial returns. The rupee has lost about 6% of its value so far in 2026, hitting a record low of 96.96 in May, prompting the central bank to spend approximately $80 billion to stem the fall.
Chinese-Indian Industrial Partnerships Expand
Saraf expects an increase in partnerships between Chinese companies and large Indian conglomerates, particularly in the industrial and consumer sectors where Chinese firms maintain manufacturing and technology strengths. He cited JSW Group’s tie-up with SAIC Motor’s MG Motor as a prime example of this trend.
The shift follows a policy change in March when India eased investment rules for minority Chinese stakes after six years of curbs. Dismissing fears of fresh capital controls from the Reserve Bank of India, Saraf expressed optimism that global investors will return to the country for growth.
“With the domestic mutual fund and insurance companies holding about $700 billion of equity (and) promoters holding 45% of the equity, there’s a lot of stability relatively in the Indian markets compared to many other places,” Saraf said. “Indian capital believes the medium- to long-term story remains intact.”
Questions About Indian Market Resilience
What caused the drop in India M&A deal value?
India’s year-to-date M&A deal value fell over 19% to $95.5 billion, down from $118.5 billion a year earlier, according to LSEG data.
How much equity do domestic funds and promoters hold?
Domestic mutual fund and insurance companies hold about $700 billion of equity, while company promoters hold 45% of the equity, providing relative stability to Indian markets.
When did India ease rules on minority Chinese stakes?
India eased investment rules for minority Chinese stakes in March after six years of curbs, according to Rahul Saraf.