Why Indian Companies Are Buying Abroad

Indian companies are actively acquiring businesses overseas in early 2026, building a stronger global presence. This strategic push is driven by several factors, including the desire to enter new markets, acquire key technology and skills, and take advantage of differences in international valuations compared to India. Sectors like technology, pharmaceuticals, and renewable energy are leading this expansion, where global scale and innovation are essential.

Seeking Global Growth and Capabilities

Indian companies, from large conglomerates to mid-sized firms, are using international acquisitions to speed up growth and gain competitive advantages faster than building them internally. For instance, pharmaceutical companies, facing expiring drug patents, are buying businesses with strong growth potential or late-stage products, often targeting the U.S. In technology, the rapidly growing artificial intelligence field is a main driver, fueling large deals and demand for AI capabilities, infrastructure, and talent worldwide. The renewable energy sector is also seeing increased M&A, particularly in the U.S., to capitalize on rising demand and policy support, often by buying established businesses or platforms.

Attractions: Valuations and Dollar Earnings

Analysts note that overseas markets often offer better valuations than India, allowing companies to achieve more expansion for the same investment. Buying assets in places like the U.S. also provides a natural hedge against rupee drops by generating income in U.S. dollars. This strategy offers stability during currency swings and contributes to stronger financial health.

Financing Deals: Leverage and Growing Warnings

Access to financing, including methods like leveraged buyouts (LBOs), is enabling outbound M&A for mid-sized companies, an area previously limited to bigger players. However, the era of easy borrowing and rising valuations is fading. Now, deals must show real operational improvements to be justified. Acquired companies need to grow sales and improve efficiency to prove their worth—a standard that not all acquisitions can meet. The cost of borrowing is a factor, with private lenders playing a key role, though typically with stricter terms now. Deals are also taking longer to sell, meaning longer investment periods.

Global Market Context

Globally, M&A activity rebounded strongly in value in 2025, led by large deals, but overall numbers were lower. This created a market where big deals succeeded while mid-sized ones struggled. Technology led large deal activity in 2025, with AI being a major reason for most tech transactions. In contrast, renewable energy M&A volumes dropped in 2025, but deal values rose due to big platform buys. Pharma M&A remains active, but it's increasingly focused on new drug pipelines rather than expanding existing businesses.

Warning: Hidden Risks in the M&A Surge

While the current surge in Indian overseas M&A appears strategic, it hides growing challenges and risks. The global M&A market shows a split where big, well-funded companies secure prime assets, while smaller players struggle with high prices and making deals work. For Indian firms, especially those using debt-financed LBOs, the need for real operational gains over just financial moves is a major hurdle. Using too much debt increases financial risk. With exit timelines extending, companies must show steady sales growth, which is harder with more cautious buyers and tougher lending standards. Geopolitical divisions and tougher regulation are major outside threats. Countries like India face more scrutiny from U.S. sanctions and trade disputes, risking asset freezes and fines, even from indirect dealings. Understanding U.S. rules like CFIUS approval and changing international tax laws is complex. Stricter rules in India and global trade issues can increase risks after a deal. Previous M&A deals often overestimated potential sales gains and underestimated rivals, leading to overpaying and failed integration. Today requires strong strategy and solid operational execution to manage these challenges. If not managed well, this expansion could become a problem.

Outlook: Caution and Selectivity Ahead

Indian M&A abroad is set to continue into 2026 due to ongoing strategic needs. However, the market will likely see more careful selection and execution. Companies that can handle strict regulations, geopolitical risks, and show real operational improvements beyond just using debt will do best. Larger, more significant deals will likely continue, benefiting buyers with strong finances and clear plans. Mid-sized companies using a lot of debt might struggle unless they can boost efficiency and profits.