India’s policy uncertainty could see its merger & acquisition glory be temporary, says Chinese media

Beijing, Dec 29: India saw a rise in merger and acquisition (M&A) deals driven by foreign investors after overtaking China to become the world's fastest-growing economy but that euphoria may be short-lived because of its unstable trade policy, China's Global Times reported on Thursday, December 27.

The report also cited the experts to say that as China finds itself "on a more competitive footing with its push for further reform and opening-up", it may lead to diverting some of the foreign investment away from its competitor India. It said the unstable trade policy might keep the investors from making further moves in the market after the deals are made.

"M&As targeting Indian companies reached $93.7 billion this year, up 52 percent year-on-year, the highest figure since the country started opening-up in the 1990s. Acquirers spent $39.5 billion in overseas purchases in India versus $32.8 billion in China, according to a report from the Wall Street Journal, which cited Dealogic, a financial markets platform," the Global Times report added.

The report also cited experts speak about the many positives the Indian economy is having at the moment, from being an attractive destination for foreign investors to promotion of manufacturing and infrastructure industries that are luring investors from Japan and even enticing Chinese companies like Alibaba Group Holding to pump in money into food delivery industries, yet they have aired caution that the surge in India's M&A deals this year could be temporary and many may not turn out to be profitable as well.

"Some of these deals were carried out as hedges by foreign investors because of the unstable China-US trade relationship. With the continuous push of China's reform and opening-up, and the new policies that may be rolled out to attract foreign investors next year, it's possible that some of these investors might turn back to China," Dai Yonghong, professor at the Institute of South Asian Studies of Sichuan University, Chengdu, told the Global Times on Thursday.

The experts also warned that frequent policy shifts could be potentially risky for foreign companies that do business in India.