Indian Companies Accelerate Overseas Acquisitions as Domestic Investment Stagnates
Indian companies are increasingly acquiring foreign assets, with 162 firms spending over $18bn on outbound acquisitions in 2025, a 34% increase from the previous year. This includes Sun Pharmaceuticals' $11.75bn acquisition of Organon & Co. and Tata Motors' $4.4bn purchase of Iveco.
Analysts indicate that this wave of acquisitions is driven by strategic and operational considerations, rather than solely global ambition. The domestic economic landscape in India presents a challenge, characterised by a notable exodus of foreign portfolio investors, a sharp deceleration in net foreign direct investment, and consistently low private sector investment, despite governmental tax incentives and production-linked subsidies.
Domestic Stagnation Drives Overseas Growth
V Anantha Nageswaran, India's chief economic advisor, recently acknowledged the disappointing capital formation rates from the private sector, despite robust corporate profit growth among the top 500 companies post-Covid. This disaffection with the domestic business environment is pushing companies to expand overseas, where diversification and capability-building opportunities are more readily available.
Saurabh Mukherjea of Marcellus Investment Managers observed that numerous Indian companies are establishing greenfield factories in regions like the US, citing easier access to industrial land and working capital compared to India. This trend extends beyond large corporations, with dozens of smaller firms pursuing similar investments and acquisitions. Neha Singh, co-founder of Tracxn, attributes this expansion to stronger balance sheets and improved access to global financing, as companies seek to acquire markets, brands, technology, and established distribution networks.
Supply Chain Protection and Future Trends
The acceleration in overseas acquisitions also reflects efforts to protect supply chains in an environment where trade tariffs and chokepoints are increasingly weaponised. However, such international ventures carry financial risks; many deals, including the substantial Sun Pharma acquisition, are entirely cash-based, without equity components.
Experts anticipate a continued surge in outbound deals, potentially hastened by free trade agreements between India and Western nations. The inclination of next-generation corporate scions to reside and study abroad, coupled with the Indian rupee's consistent depreciation against the US dollar, further reinforces the appeal of holding assets in foreign currency. Despite this outward focus, large domestic investments are likely to be approached with selective caution due to persistent weak demand and anaemic private investment within India, compounded by global energy shocks and the potential impact of AI on the job market.
