The Indian mergers and acquisitions market registered an increase of 12 percent with disclosed deal value worth USD 22.6 billion in FY14 from USD 20.1 billion seen last year, said global advisory services firm Ernst & Young (EY).

"The country continues to be a major attraction for global players, as evinced by their continuing interest in the country's growth story. We remain optimistic about the M&A outlook as it continues to stabilize over the next year," said Amit Khandelwal, national director and partner, transaction advisory services, EY.

However, the EY's annual review of the M&A landscape showed the number of M&A transactions involving Indian companies was relatively muted in fiscal 2013-14, which stood at 674, down by 20 percent against 843 deals seen in FY13.

The report noted that in FY14, India witnessed 293 cross-border transactions with an aggregate disclosed deal value of USD 17.8 billion, which was 20 percent higher in terms of value as compared to FY13.

The advisory services firm said that inbound deals led the pack, both in terms of value and volume, as foreign acquirers moved to capitalise on the falling Indian rupee by buying domestic assets.

"Inbound deal value for FY14 stood at USD 10.9 billion, up by 29 percent from the previous year (USD 8.4 billion). Additionally, the share of inbound deals in the total M&A value increased to 48 percent in FY14 from 42 percent in FY13," the report said.

"International players seem to be getting more confident about India's long-term growth story and continue to remain optimistic on the economic outlook."

The EY report also highlights that on the outbound front, the decline in volume was significant, falling by 32 percent (102 deals) against the previous year (149 deals).

"Indian players were wary of buying assets overseas as heavily leveraged balance sheets and slow growth induced them to focus more on debt reduction and cost optimisation instead of inorganic growth," the report pointed out.

"In addition, the devaluation of the Indian rupee made outbound transactions more expensive as compared to the previous year."

According to the advisory firm, several foreign multinational companies (MNCs) increased their stakes in Indian units in FY14.

"While Indian companies confront challenges including mounting debt and high interest costs, most MNCs have built significant cash reserves which enabled them to raise their holdings in Indian units," the report added.