INDIA Trends and Developments Contributed by: Kunal Chandra, Kabeer Mathur, Chinmay Bilgi, Sharnam Vaswani and Rajdeep Mukherjee, Trilegal
diligence, thorough disclosure and well-negotiated policy terms remain as consequential as ever. Global ESG Standards in the Indian Context ESG expectations are increasingly influencing trans - action diligence and post-acquisition integration in India, particularly in transactions involving multina - tional acquirers and global investment funds. Interna - tional investors are frequently required to comply with ESG disclosure regimes in their home jurisdictions and make ESG-linked commitments to their investors, and are therefore extending similar expectations to Indian target companies. As a result, buyers are increasingly seeking diligence in relation to environmental compli - ance, sustainability, workplace practices and govern - ance frameworks, along with contractual protections addressing historic non-compliance and ongoing ESG reporting obligations. However, the practical implementation of these stand - ards remains uneven in India. Many mid-sized busi - nesses operate within complex supplier ecosystems where ESG metrics are not uniformly measured or reported, making it difficult to apply global bench - marks without significant post-acquisition operation - al adjustment. ESG considerations are accordingly evolving into structured diligence and post-transac - tion integration workstreams in cross-border transac - tions. Opening the Door to Acquisition Financing Recent regulatory developments have begun to expand the role of acquisition financing in the Indian M&A market. In February 2026, the RBI introduced a framework permitting commercial banks to provide credit facilities to fund acquisitions of equity shares or compulsorily convertible debentures of target com - panies, including refinancing of existing acquisition debt and, in certain cases, refinancing of the target’s outstanding borrowings where such refinancing forms part of the acquisition structure. The commercial significance of this development lies in the expansion of funding options available to acquirers. Historically, leveraged acquisitions involv - ing Indian targets had relied on offshore lenders or pri - vate credit funds because domestic banks had limited ability to finance share acquisitions. The new frame -
work, however, opens up the possibility of domestic bank participation in acquisition financing, which is expected to improve deal execution and structuring flexibility. Targeted FDI Reforms Reshaping India’s Foreign Investment Landscape India’s foreign direct investment (FDI) regime has undergone targeted sectoral liberalisation between 2024 and 2026, with the most consequential reform being the removal of the foreign ownership ceiling in the insurance sector, which now permits 100% FDI. The space sector has been simultaneously opened up through a tiered framework, allowing full foreign ownership in satellite component manufacturing, up to 74% foreign ownership for satellite operations, and up to 49% foreign ownership for launch vehicles and spaceports, replacing what was previously a largely closed market dominated by the Indian Space Research Organisation (ISRO). These reforms are expected to accelerate M&A activ - ity across two distinct deal constructs. In the insur - ance sector, the removal of the 74% ownership ceiling eliminates the regulatory imperative for joint venture arrangements, enabling global insurers to pursue full ownership. This has already generated deal activity against the backdrop of India’s insurance penetration of approximately 3.7% of GDP – less than half the global average – presenting a compelling structural growth thesis. The new framework also, for the first time, permits mergers between insurance and non- insurance entities. In the space sector, the differen - tiated FDI framework is designed to attract global aerospace capital into a market historically dominated by ISRO, with broadened automatic route thresholds reducing execution friction and compressing deal timelines across both sectors. India’s amendment to Press Note 3 delivers a target - ed relaxation of the screening regime for investments from land-bordering countries: investments carrying sub-10% beneficial ownership from such jurisdic - tions, without control, may now access the automatic route, while direct investments remain subject to prior approval. Selected manufacturing sectors, including advanced battery components and rare earth pro - cessing, now benefit from a statutory 60-day approval
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