Level playing field needed for domestic acquisitions

Merger and acquisition activity in India is thriving at the moment. However, it is not as vibrant as in the US and Europe on account of a lack of acquisition financing options, particularly in the context of the acquisition of Indian companies.

A brief comparison of key policies that impact the financing of onshore and offshore acquisitions underlines the reality that Indian regulations favour and facilitate the financing of overseas acquisitions by Indian companies over the financing of acquisitions of Indian companies.

Funding options

Indian regulations do not permit domestic funding from banks or overseas funding in the form of external commercial borrowings (ECBs) to acquire shares of Indian companies.

Karan Singh is a partner at Trilegal. Nishant Parikh is a senior associate. Trilegal is a full service law firm that advises on corporate and commercial law in India and provides commercially oriented legal advice and services in relation to all sectors of the economy. The firm has offices in Delhi, Mumbai, Bangalore and Hyderabad and has over 80 lawyers, some of whom have experience in law firms in the United States, United Kingdom and Japan.