Recent M&A Reforms in India: What Dealmakers Need to Know

• Author(s): Rudra Srivastava, Neha Meena
• Date: 05-Sep-2025
• Post in: Merger & Acquisitions

India’s mergers and acquisitions (M&A) framework has seen sweeping reforms between 2024 and 2025. These changes aim to make regulations faster, clearer, and more aligned with global practices, while still keeping investor protection and compliance at the forefront.

From company law amendments that ease cross-border mergers, to competition law updates introducing new thresholds, to FDI and FEMA clarifications and tax changes, the M&A landscape has become both more facilitative and compliance-intensive.

This article breaks down the major reforms and their practical impact on deal structuring, regulatory approvals, and investment strategy.

1. Company Law: Faster Cross-Border Deals and Reverse Flipping

The Companies Act, 2013 remains the backbone of India’s corporate restructuring framework. Traditionally, only domestic small companies and wholly owned subsidiaries could use the “fast-track” merger route, while others had to undergo the longer National Company Law Tribunal (NCLT) process.

What’s new?

• The scope of fast-track mergers now covers certain cross-border combinations[1].
• Specifically, foreign parent companies can merge into their wholly owned Indian subsidiaries.
• Conditions apply:
  • The Indian company must be a start-up, small company, or wholly owned subsidiary.
  • At least 90% of shareholders and creditors (by value) must approve.
  • Both companies must declare solvency.
  • RBI approvals are mandatory under FEMA.
  • If the foreign entity is from a country sharing a land border with India, additional filings are required.
     

Why it matters:

• This reform enables reverse flipping, where Indian companies that once moved abroad for funding or tax reasons can now re-domicile in India more easily.
• Companies can consolidate operations, save costs, and access Indian capital markets faster.
• Safeguards remain in place: regulators can still escalate cases to the NCLT if public interest is at stake.
   

2. Competition Law: New Thresholds and Broader Definitions

The Competition Act, 2002 governs merger control in India. Until now, only asset- and turnover-based thresholds determined whether deals required approval from the Competition Commission of India (CCI).

Key reforms (via the 2023 Amendment and 2024 Regulations)[2]:

• Deal Value Threshold (DVT):
  • Mandatory CCI filing if the deal value exceeds ₹2,000 crore and the target has “substantial business operations in India.”
  • Substantial operations can include:
    • At least 10% of global active users in India.
    • Indian ownership of IP or digital assets.
    • Significant local revenue, expenses, or R&D activity.
       
• Revised asset/turnover thresholds:
  • Parties must notify if they individually have Indian assets over ₹2,500 crore or turnover above ₹7,500 crore.
  • Group thresholds: assets above ₹10,000 crore or turnover above ₹30,000 crore.
     
• Faster timelines:
  • Phase I review cut from 30 working days to 30 calendar days.
  • Phase II maximum reduced to 150 days (from 210).
     
• Wider definition of “control”:
  • Now includes negative control, like veto rights over key strategic decisions.
  • Minority investors and PE funds may trigger merger filings.
     
• Green Channel refinements:
  • Excludes deals involving sensitive data sharing, especially in digital markets.
     

Why it matters:
India’s competition regime is now closer to global practice. But acquirers must factor in CCI review early, carefully assess information/control rights, and prepare for tighter scrutiny.
 

3. FDI & FEMA: Clarity on Downstream Investment

Foreign investment rules under the Foreign Exchange Management Act (FEMA), 1999 and RBI directions were long seen as complex for layered deal structures. Recent reforms aim to fix that.

Highlights:

• Downstream investments clarified (Jan 2025)[3]:
  • Foreign Owned and Controlled Companies (FOCCs) can invest downstream under the automatic route, provided the sector allows 100% FDI and pricing/reporting norms are followed.
  • This clears uncertainty for PE firms and foreign groups with multiple Indian subsidiaries.
     
• Secondary share swaps permitted (Aug 2024):
  • M&A deals can now use share-for-share transactions between Indian and foreign entities, without requiring new capital inflows.
  • This aligns Indian rules with global M&A practices.
     
• Compliance eased[4]:
  • Reporting formats simplified.
  • Longer filing timelines allowed for certain capital account transactions.
     
• Checks remain:
  • Round-tripping (routing Indian funds abroad and reinvesting in India) is still prohibited.
  • Sensitive sectors like telecom, defense, and insurance continue to face ownership caps and security reviews, especially for investors from neighboring countries.
     

Why it matters:
Foreign investors now have greater flexibility in structuring Indian deals, with fewer procedural hurdles—but must remain cautious in regulated sectors.
 

4. Tax Reforms: Impact on M&A

Tax changes in the last two Union Budgets are also reshaping deal economics.

• Carry-forward losses (Budget 2025):
  • For mergers after April 1, 2025, loss carry-forward is limited to the remaining portion of the original 8-year period (calculated from when losses were first incurred).
  • Earlier, the clock reset post-merger, extending tax benefits longer.
  • This curbs indefinite tax arbitrage in M&A.
     
• Angel tax[5] abolished (Budget 2024):
  • Long criticized for taxing share premiums in start-ups, often triggering valuation disputes.
  • Its removal boosts investor confidence and facilitates smoother exits/acquisitions in the start-up ecosystem.
     

Why it matters:
Tax certainty improves deal predictability, especially for cross-border acquirers and start-ups navigating exits.

Conclusion

India’s latest M&A reforms show a clear intent: make deal-making faster and more globally competitive, while tightening compliance expectations.

For companies and investors, this means:

• More options to structure cross-border and domestic mergers.
• Faster regulatory approvals, but also broader triggers for notification.
• Greater clarity on foreign investment rules, with continued oversight in sensitive sectors.
• Tax reforms that simplify some aspects (like angel tax) but restrict others (like loss carry-forward).
   

Bottom line: Successful M&A in India now requires early legal assessment, transparent structuring, and proactive regulator engagement. With the right planning, the new framework opens the door to deeper cross-border integration and more efficient domestic consolidation.