Indian companies -- big or small - after making a mark in the domestic markets are now reaching for the overseas destinations to tap new markets and acquire technologies. A major portion of the Indian overseas investment went into acquiring companies abroad. Indian companies are shopping overseas for acquisitions as part of a strategy meant to announce India's arrival on the global stage. Reasons for the deals varied from access to high growth markets, technology & knowledge, enhancement of own positioning in the value chain, obtaining economies of size and scale of operations to tapping of natural resource banks and leveraging international brand names for own brand building.

According to the latest Unctad’s World Investment Report 2007 (WIR ’07), India’s outward FDI was the second highest at US$ 20.4 billion after Brazil at US$ 28 billion. Significantly, while China’s outward FDI rose by 32 per cent, to US$ 16 billion in 2006, India’s went up by almost four times.

Mergers and Acquisitions

In its latest issue of Dealtracker , Grant Thornton a global consultancy firm stated that India Inc had 92 merger and acquisition deals, valued at nearly US$ 6 billion, in the first two months of 2008. The number of outbound deals has far exceeded the domestic ones in terms of value break up. While inbound deals were valued at US$ 0.45 billion, outbound deals were estimated to be worth US$ 2.8 billion and domestic deals were valued at US$ 2.7 billion.

In fact, the year 2007 has been accredited as the year of mergers and acquisitions for corporate India. Domestically, 2007 saw another record year of deal activity, with total mergers and acquisitions (M&A) and private equity (PE) deals up 82 per cent from US$ 21 billion in 2006 to US$ 38 billion in 2007. As well as volume, both number (867 against 697) and average size of deals also rose significantly. Indians bought up companies in Europe and the US, splashing out some US$ 33 billion.

India's M&A scorecard signals a new level of participation by Indian firms in global business and its arrival on the global map. Indian businessmen and businessmen from other developing countries have turned tradition on its head by investing abroad through mergers and acquisitions (M&As).

Due to the rapid growth in Indian companies' M & A activity, India has emerged as the most acquisitive nation in emerging nations, according to global consultancy KPMG's Emerging Markets International Acquisitions Tracker.