2025 was a remarkable year for deal-making in India. It has demonstrated the strength and resilience of Indian businesses and a nimble business environment.
Cross-border and domestic business flow remained strong throughout the year.
The same trend is expected to continue in the coming years, regardless of temporary headwinds in global economic conditions.
Reports indicate that by the end of 2025, PE/VC deal values have seen a 31% year-over-year increase from 2024, and similarly, the number of deals has seen a 12% increase from 2024. Capital market activity also remains at a peak in 2025.
As we look forward in the short to medium term, sectors such as consumer/retail, energy/renewables, healthcare/wellness, manufacturing, BFSI and technology (including AI and SaaS-based gaming) will continue to attract interest.
These trends are no less the result of the regulatory crucible in India, which has also aided subtle sharp deal-making.
The most notable and recent example is the proposed liberalization and clarity provided by the Government of India regarding Press Note 3 of 2020.
Beneficial ownership is to be tested at the level of the investor entity, confirming that investors with non-controlling beneficial ownership of a bordering country of up to 10% will be allowed under the automatic regime of India’s FDI regime subject to relevant sectoral caps, entry routes and accompanying conditions.
There are also key sectors where there should be an accelerated clearance of investment from landlocked countries.
Currently, these are investments in the production of capital goods, electronic capital goods, electronic components, polysilicon and ingot wafers, which are to be processed within 60 days.
These changes are expected to boost domestic and international sentiment and confidence in doing business in India.
In February, the regime for regulating external commercial loans was liberalized with a wider group of eligible borrowers and recognized lenders.
There are various other welcome changes in end-use restrictions, currency flexibility, total cost cap and standardized minimum average maturity.
One key benefit of the changes relates to acquisition financing, where external debt becomes available for certain categories of control as well as distressed acquisitions.
As the mandatory dematerialization regime of shares begins to settle in, the potential bottlenecks in the primary and secondary transactions of the respective Indian companies have largely subsided.
The range of fast-track mergers has expanded, which should speed up any intra-group restructuring before or as part of a third-party acquisition.
Substantial changes in the respective regimes have been prescribed with the introduction of the Indian Labor Codes and the Digital Data Privacy Act, 2023.
As a result, deal due diligence needs to pay more attention to how employee benefits and compliance are handled at the target company.
Similarly, due diligence and discussion of the agreement should ensure that the parties involved in the future agreement handle personal data in an appropriate manner.
Overall, as India’s dealmaking manual continues to globalize, the dealmaking rulebook continues to evolve to ensure that transactions can be evaluated with certainty and predictability by both domestic and international players.
Vivek K Chandy is the Joint Managing Partner of JSA Advocates & Solicitors
