India's M&A Market Buoyed by Manufacturing Investment and Technology Growth

India Cements Position as Asia's Most Dynamic M&A Market

India continued to stand out as one of Asia's most dynamic M&A markets throughout 2025, with approximately 6.5% GDP growth providing a supportive macroeconomic backdrop for dealmaking across virtually every sector of the economy. The combination of robust economic expansion, favorable demographics, deepening capital markets, and an increasingly sophisticated corporate landscape has created conditions uniquely conducive to merger and acquisition activity.

The breadth of India's M&A market distinguishes it from many of its regional peers. Unlike markets that are heavily concentrated in a single sector or deal type, India has generated meaningful transaction volumes across manufacturing, technology, financial services, healthcare, consumer goods, and infrastructure, attracting both domestic and international participants.

Manufacturing Sector Emerges as a Bright Spot

The manufacturing sector has emerged as a particular bright spot for M&A activity in India, benefiting from the government's "Make in India" initiative and the broader global trend of supply chain diversification away from China. As multinational corporations seek to reduce their dependence on Chinese manufacturing, India has positioned itself as a leading alternative destination.

Electronics manufacturing has seen significant investment, with global companies establishing or acquiring production facilities for smartphones, consumer electronics, and semiconductor packaging. The Indian government's production-linked incentive schemes have proven effective in attracting both greenfield investment and acquisition-driven market entry.

Pharmaceuticals manufacturing and contract development and manufacturing organizations have attracted substantial M&A interest. India's established position as the "pharmacy of the world," combined with growing demand for contract manufacturing from global pharmaceutical companies, has made the sector a magnet for both strategic and financial buyers.

Automotive components manufacturing has drawn investment from companies seeking to build diversified, resilient supply chains. India's large domestic automotive market and competitive cost structure provide attractive fundamentals for both domestic consolidation and cross-border acquisitions.

Defense equipment manufacturing has benefited from India's policy push toward defense self-reliance, with the government actively encouraging private sector participation and foreign direct investment in defense manufacturing.

Private Equity Activity at Near-Record Levels

Private equity activity in India reached near-record levels in 2025, with deployments spanning technology, financial services, healthcare, and consumer sectors. The country's large and growing economy, combined with a deepening pool of investable companies, has made India one of the most important markets for global private equity firms.

Buyout activity has increased as more Indian companies reach the scale and maturity that support leveraged transactions. Growth equity remains the dominant transaction type, with firms investing in high-growth companies that are scaling rapidly but have not yet reached profitability or public market readiness.

Several marquee transactions during 2025 involved private equity firms acquiring controlling or significant minority stakes in companies across diverse sectors, demonstrating the breadth of opportunity available in the Indian market.

Public Markets Creating a Virtuous Cycle

India's buoyant public markets have played a crucial role in sustaining the M&A cycle by providing attractive exit opportunities for investors. The ability to exit investments through initial public offerings on the Bombay Stock Exchange and National Stock Exchange has created a virtuous cycle: successful IPO exits generate strong returns, which attract additional capital from global limited partners, which in turn funds new investments.

The Indian public equity market's strong performance has also supported M&A activity by providing listed companies with valuable currency for share-based acquisitions and by creating a benchmark against which private transactions are valued. Companies that might otherwise resist M&A discussions have been motivated by the premium valuations available in public markets.

Technology Sector Deal Flow

India's technology sector generated significant deal flow across multiple subsectors in 2025. Enterprise software companies, particularly those serving global markets from India-based development centers, attracted acquisition interest from both strategic buyers and private equity firms.

Fintech remained one of the most active deal categories, driven by India's advanced digital payments infrastructure, growing financial inclusion, and large underbanked population. Transactions ranged from early-stage venture investments to growth equity rounds and strategic acquisitions by established financial services companies.

E-commerce continued to evolve, with consolidation among horizontal platforms and increasing specialization in vertical categories. Artificial intelligence companies, including those developing enterprise AI applications, data analytics platforms, and AI-enabled services, attracted growing investor interest as the technology's commercial applications matured.

Cross-Border Activity Increasing

Cross-border M&A involving Indian companies also increased meaningfully during 2025. Indian corporations are increasingly willing to pursue international acquisitions, driven by ambitions to access new markets, acquire technology, and build global scale. This outbound M&A trend, while still in its early stages compared to Chinese outbound activity at its peak, represents a significant development in India's corporate evolution.

Inbound cross-border activity remained robust, with multinational corporations and financial investors targeting Indian assets across multiple sectors. The improving ease of doing business, combined with India's structural growth advantages, has kept the country high on the priority list for international dealmakers.

Challenges Persist Despite Positive Momentum

Despite the broadly positive momentum, challenges remain for M&A participants in India. The regulatory environment, while improving, still presents complexity for both domestic and cross-border transactions. Navigating multiple regulatory bodies, obtaining necessary approvals, and managing compliance requirements can extend transaction timelines and increase costs.

The newly revised competition thresholds introduced by the Competition Commission of India add additional compliance requirements for transactions that meet the revised filing criteria. While the updated thresholds are intended to improve regulatory oversight of significant transactions, they have added a layer of complexity that dealmakers must factor into their planning and execution timelines.

Notwithstanding these challenges, the fundamental drivers of India's M&A market, including strong economic growth, favorable demographics, deepening capital markets, and an increasingly sophisticated corporate landscape, remain firmly in place and are expected to sustain elevated deal activity into 2026 and beyond.