2023 was a year of significant global challenges, including interest rate hikes and ongoing geopolitical conflicts. \u00a0While 2024 began with optimism for economic growth and increased deal activity, persistent geopolitical tensions kept uncertainties high. \u00a0Global M&A experienced a modest upward trend in 2024 with a 9.8% increase in deal volume compared to 2023.<\/p>\n
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India displayed resilience in 2024, achieving a GDP growth rate of 8.2%. \u00a0Cross-border M&A deals surged by 66% in the first nine (9) months of 2024, with IT, manufacturing and banking sectors leading the inbound M&A activity. \u00a0IPOs witnessed a surge which enabled exits for private equity investors.<\/p>\n
India\u2019s 2024 growth story was a mix of positive developments and persistent challenges.\u00a0 Key drivers included the re-election of the government, the \u201cMake in India\u201d initiative, boost in the production-linked incentives, growing technical capabilities, a skilled large workforce and increased domestic consumption.\u00a0 Challenges remained as the rupee depreciated against the US dollar, inflation proved stubborn, markets remained volatile and global economic uncertainties persisted throughout 2024.<\/p>\n
Come 2025, Donald Trump\u2019s widespread statements to impose tariffs on BRICS nations, including India, as part of the \u201cAmerica First\u201d economic agenda, have raised uncertainties in global trade.\u00a0 If this proposal were to materialize, Indian companies will face pressure on their exports or will need to establish manufacturing facilities in the US to avoid steep tariffs, if their key market is the US.\u00a0 Presently, it seems that the services sector is insulated from tariffs, and as a result, outsourcing activity will continue to see growth and inbound investments.<\/p>\n
While it is almost certain that outsourcing of manufacturing activities into India for servicing the US market can face a downward trend, US investors are likely to continue to invest in India to augment their manufacturing activities to service other global markets, excluding the US, given India\u2019s technical capabilities, cost competitive advantage, and skilled large workforce.<\/p>\n
To remain one of the preferred inbound M&A destinations, India needs to attract foreign investors not only from the US but from other countries as well by speeding up and continuing policy reforms.\u00a0 A promising reform is the upcoming labour law overhaul, which will consolidate various labour legislations into four (4) codes, and is anticipated to be unveiled in the Union Budget 2025.\u00a0 The government is also expected to continue its focus on skill development.\u00a0 The government\u2019s move to ease FDI inflows in space, e-commerce, pharma, and defence sectors, with presently nearly 90% of the sectors being under the automatic route is commendable.\u00a0 The government needs to ease regulations in permitting investments from land border countries in non-sensitive sectors, and to ease import duties.<\/p>\n
There is significant uncertainty how Trump\u2019s trade policies will be implemented across businesses and countries which is likely to delay cross- border investments.\u00a0 In our view, the first six months of 2025 will be more of a wait and watch mode as US trade policies unfold and investors reset expectations.\u00a0 The remaining part of 2025 will likely provide clarity on US trade policies and how cross-border M&A will shape up for a few quarters thereafter. \u00a0Stay tuned.<\/p>\n","protected":false},"featured_media":0,"template":"","class_list":["post-47196","legal_developments","type-legal_developments","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments\/47196","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments"}],"about":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/types\/legal_developments"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/media?parent=47196"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}