India bullish on M&A in the EU, US

New Delhi: With Indians bullish on international acquisitions and mergers, the Indian enterprises are expected to buy about 400 corporations in the European Union and the US.

According to a report by European Institute for Asian Studies (EIAS) and Assocham titled ''Dynamics of Mergers and Acquisitions', easy availability of funding, renewed business confidence, relatively stable economic and political regime would be the principal factors, leading to intensifying of (M&A) activities between India, the EU and the US.

''During 2006, Indian companies had acquired more than 180 companies in Europe and US and their number would exceed 210 for Europe and America by end of the current fiscal,'' said Assocham President Venugopal N Dhoot.

The acquisitions are helping Indian companies emerge as a significant player on the global stage with six indian companies featuring on the Fortune Global list of biggest companies in the world.

Based on the current growth and M&A trends, this number is expected to double by 2010 with 15 fast growing Indian companies poised to radically transform industries and markets around the world, added Dhoot.

India�s economy is expected to keep this pace for at least a decade, surpassing the UK by 2015. However, the Paper recommends a comprehensive competition policy framework is needed both in India and the EU so that trade facilitation takes place to boost up merger and acquisition activities so that Indian public sector enterprises also become its integral part.

The India-EU trade has grown impressively over the years, from 4.4 billion euros in 1980 to 40 billion euros in 2006.

During the seventh EU-India Summit in Helsinki in 2006, an agreement was singed to negotiate bilateral deal on trade and investment which aims to eliminate 90 per cent of tariffs covering goods, services investment, trade facilitation, commerce and industry within seven years of the agreement coming into force.

The EU is India�s largest source of foreign direct investment, especially in services. However,India accounts for just 1.7 per cent of EU's total trade and attracts only 0.3 per cent of its world-wide investments.

India�s economic engagement with the world during FY 2006-07 is likely to exceed 450 billion dollars, including export and import of goods and services.

The country is now among world�s most competitive producer of steel, auto component, pharmaceuticals, chemicals offering low-cost high value products and the future M&A activities between India and Europe would also concentrate around them, says the Paper.

Trade with the EU constitutes almost a quarter of India�s exports and imports and it has the potential to grow much more, but one of the reasons impending India�s exports to the EU are the many non-tariff barriers that restrict their entry into the EU market, the Paper added.

The Paper recommends that suitable policy measures be taken at bilateral levels between India and the EU so that the trade barriers go off and create conducive atmosphere and climate, so that trade facilitation�s flow in smooth manner and create room for absorption of corporations.