Mergers and acquisitions: The evolving Indian landscape
Hiten Kotak, Leader, Mergers and Acquisitions Tax, PwC India
This is definitely one of the most robust phases for M&As in India. At a time when there is a lull in the global economy, the strength of the Indian economy has fostered an environment where Indian business houses can spot opportunities to grow exponentially through vertical, horizontal and concentric M&A deals. Complementing this situation, the Indian government has proactively undertaken to evolve a tax and regulatory regime that will help the Indian M&A sphere mature. It has also undertaken various policy initiatives to provide a much-needed impetus to domestic and foreign investments.
Against this backdrop, we present to you a comprehensive report that captures our understanding and analysis of the evolving M&A Tax landscape in India.
We start by delving into the recent trends in the M&A sphere globally and in India. We then discuss how M&As have catalysed inorganic growth and how regulatory considerations have acted as trigger points for M&A deals. While any M&A deal seeks to achieve benefits out of synergies and other factors, one should always be wary of what can go wrong in such deals in order to better prepare for such eventualities.
In the next section, we deep dive into the essentials of M&A and discuss the importance of a health check-up to identify and mitigate any unforeseen risks prior to undertaking any transaction. We then analyse various optimum structures to conceptualise any deal. We also discuss the recent regulatory changes in the FDI policy and corporate law which have made cross-border M&A feasible. Now, more than ever, when Indian business houses have amassed significant wealth, succession planning through a trust structure assumes significant importance to ensure seamless succession of wealth and ownership/control over the business from one generation to the next.
One cannot underestimate the ever-evolving and recent tax and regulatory advances which impact any M&A transaction. Therefore, we proceed to analyse the impact of anti-avoidance measures such as BEPS, GAAR and tweaks in DTAAs between India and various low-tax jurisdictions. Given the government’s relentless focus on developing infrastructure and the real estate sector in India, we analyse the tax and regulatory regime of the newly introduced REIT/InvIT structures. Any analysis of M&A transactions cannot be complete without a discussion on the ‘indirect transfer tax’ provisions which have continued to attract much ire from foreign investors.