The momentum of mergers and acquisitions (M&A) in India is expected to remain steady in 2024 and beyond, a new Deloitte report has revealed.

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Despite global economic and geopolitical challenges, India’s deals market expected to remain steady, reflecting strong confidence from businesses and investors amidst a global economic slowdown, according to the latest ‘India M&A Trends 2024’ report by Deloitte.  

Amidst significant global challenges posed by high-interest rates, macroeconomic uncertainty, regulatory scrutiny, and geopolitical risks, India’s M&A landscape stood resilient in 2023.

The manufacturing sector, driven by automotive, is expected to spur the M&A activity with deal growth expected in auto-components and electric vehicles (EVs).

The industrial and manufacturing sector witnessed a significant 33 per cent and 22 per cent rise in deal value and volume, respectively, in 2023 compared to 2022.

Sumeet Salwan, Partner, Consulting, Deloitte India, said, The global challenges posed by high interest rates, macroeconomic uncertainty and geopolitical risks, that characterised 2023 are expected to continue into 2024 as well. While the global M&A market remains soft, Indian companies continue to be steered by a strong domestic economy. They may increasingly see M&A as a crucial strategy to help them expand, integrate supply chains and reinforce market positions.”

The government’s proactive initiatives to promote clean energy are expected to catalyse a significant rise in M&A within the energy sector, the report added.

Also M&A in the financial sector is anticipated to be driven by large-scale consolidations and responses to regulatory shifts.

Private equity (PE) is projected to remain consistent in 2024, while deal momentum is expected to revive post-2024, supported by flattening interest rates and recovering economic growth.

M&A deal value in India reduced to $136 billion in 2023 from $186 billion in 2022.

Financial services and technology, media and telecom (TMT) continues to be the top sectors driving M&A. 

Financial services sector witnessed a 45 per cent decline in deal value and 23 percent increase in deal volume from 2022. TMT sector encountered a 33 per cent year-on-year reduction in deal value, while deal volume fell by 34 per cent.

Overall, cross-border deal value declined by 11 per cent in 2023. However, inbound deals saw significant growth, with their share increasing to 41 percent from 27 percent in 2022. Conversely, outbound M&A deal value experienced a notable 49 per cent decline compared to 2022.

The energy sector saw a sharp 63 per cent increase in deal value in 2023 as compared to 2022, driven by renewable energy and rising interest in clean energy from foreign investors.

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The construction and transport sector witnessed a 44 per cent decline in deal value compared to 2022. The sector also had the highest share in outbound deal value, contributing 29 per cent to the same.

The medical and pharma sector witnessed a 17 per cent fall in deal value from 2022, driven largely by strategic buyers seeking to expand scale.