The road ahead for the Indian merger and acquisition landscape seems to be ‘brightly lit’ given the backdrop of a well-developed M&A legal and regulatory framework in India, said a PwC report.

With the global economy slowing down while the Indian economy stays particularly “resilient” and with increasing distressed assets in the Indian business environment, Indian business houses have been on the frontline of global and domestic M&A, said the report by the global consultancy firm.

As per the report, the recent deals indicate an imminent need for consolidation in various sectors, sale of distressed assets by debt-laden companies and simplification of widely dispersed group companies. “Given the backdrop of a well-developed M&A legal and regulatory framework in India, the road ahead for the Indian M&A landscape seems to be brightly lit,” it said.

PwC report titled Mergers and acquisitions: The evolving Indian landscape said that several sectors in India are in consolidation mode. For instance, it said the renewable energy sector (Tata Power acquired Welspun Energy’s assets), the banking sector (Kotak Mahindra acquired ING Vysya Bank), and the telecom sector (Reliance Communications announced the acquisition of MTS India from Sistema).

India’s e-commerce sector is a hotbed of activity, it said. With large global players like Amazon and Uber taking on a dominant role with their deep pockets, the sector is now in consolidation mode, which has become an “imperative need for survival for many”, the report said. Commenting on the report, Hiten Kotak Partner and Leader M&A Tax, PwC said the liberalisation in foreign investment policy and recent developments in the tax and regulatory environment has metamorphosed the Indian M&A landscape.

Adoption of Ind-AS for alignment with global accounting standards, amendments in tax treaties with Mauritius and Singapore, upcoming GAAR and initiating action for alignment with BEPS among other factors has led to a manifold impact on the already dynamic Indian M&A scenario, he said. The report further said another facet of M&A transactions in India is succession planning for any family-owned business.

“Creating a trust or similar entity becomes pivotal to the succession plan since it can provide a good balance between owners’ desires, professional management and healthy family dynamics,” it said. As per the PwC report, a suitably designed and customised trust structure that blends strategic objectives with the tax, regulatory and legal aspects can enable the achievement of objectives of succession planning much better than a “will” and at the same time providing the benefit of flexibility and certainty to all family members.