Overseas acquisitions, however, can be hit or miss.
Tata Steel’s purchase of Corus Steel, for instance, turned out be an “albatross” around the company’s neck for decades, says Mukherjea.
What is also striking, he adds, is that even after all these years, Indian companies are still unable to pay for these deals with shares. Even a deal as large as the Sun Pharma one was all-cash, which can be financially risky.
Still, this will not be the last of such acquisitions.
A spree of free trade deals between India and the UK, Europe, Australia and other countries could hasten the trend and lead to a “deluge of outbound deals from India as companies head off to invest in the West to build up bases in the years to come”, Mukherjea says.
Moreover, many next-generation corporate scions are choosing to live and study abroad, so it is logical that they would want to hold their assets in foreign currency, “especially because the rupee loses 40% of its value to the dollar every decade”, he adds.
But the overseas expansion is likely to be accompanied by “selective caution” on large domestic investments, says Singh.
India remains locked into a cycle of weak demand and anaemic private investment, a trend that has now also been further exacerbated by a global energy shock and the risks agentic-AI poses to its already weak job market.
Whether India surpasses last year’s $18bn figure remains uncertain because of the current “geopolitical air pocket”, says Abrol of Grant Thornton.
But the long-term trend, experts say, is directionally clear: Indian companies will hedge more and more against growing economic uncertainties in Asia’s third largest economy at a time when its government is desperately trying to curb an outflow of dollars and attract foreign capital to kick-start the domestic growth engine.
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