Indian outbound M&A at record $15bn H1 pace as growth cools

Indian companies are buying foreign businesses at the fastest pace in two decades, and Sun Pharmaceutical’s all-cash $11.75 billion bid for US drugmaker Organon & Co has become the emblem of where this wave is heading. The deal — the largest Indian overseas acquisition since Tata Steel bought Corus in 2007 — is not a one-off. It is the leading edge of a structural shift that pushed India Inc’s outbound M&A to a record $18 billion across 162 deals in 2025, 34 per cent higher than the year before. And 2026 is running even hotter.

“We could cross $15 billion in deal value in just the first half of this year,” Sumeet Abrol, partner and national leader for deals at Grant Thornton Bharat, told the BBC. The firm’s data shows outward foreign direct investment from India hit $48.6 billion in the fiscal year to March 2026, up from $41.6 billion a year earlier. April alone saw a 90 per cent year-on-year surge to $6.8 billion, according to the Financial Express. These are not tentative feelers — they are conviction-sized bets on growth beyond India’s borders.

The domestic double squeeze

The acceleration has a mirror image at home. Foreign portfolio investors pulled more than $20 billion out of Indian equities in the first four months of 2026, surpassing the full-year record set in 2025, Reuters reported. The rupee has weakened to repeated record lows. And while India’s top 500 listed companies have posted blistering profit growth — 30.8 per cent per annum since the pandemic — private capital formation has lagged badly.

“Corporate profits grew at 30.8 per cent per annum. But still, our overall capital formation rates from the private sector have been disappointing,” V Anantha Nageswaran, India’s Chief Economic Advisor, told the BBC. The gap between soaring profits and stalled domestic investment is the pressure valve pushing capital outward.

Saurabh Mukherjea, founder of Marcellus Investment Managers, put the structural frustration more directly — and his words carry weight precisely because he is not a bear; Marcellus runs one of India’s largest domestic-focused equity portfolios.

“There is plenty of Indian money heading abroad. Even among the companies that we own in our portfolio, many are setting up greenfield factories in the US and other places where industrial land is almost free and accessing working capital is much easier than here.”
— Saurabh Mukherjea, Founder, Marcellus Investment Managers

When one of India’s most prominent stock-pickers describes it as easier to build a factory in Ohio than in Pune, the domestic investment story has a credibility problem. Harsh Goenka, chair of the RPG Group, has separately pointed to “policy and tax uncertainty” as the reason companies are reluctant to commit fresh capital at home. The capital is there — the confidence to deploy it domestically is not.

From trophy-hunting to strategic necessity

But the character of the deals has changed, and that may be the most durable part of this cycle. Bhavesh Shah, managing director and head of investment banking at Equirus Capital, told Reuters that the rise of capability-led acquisitions marks a departure from the trophy-hunting that defined earlier waves.

“What’s changed is the rise in capability-led acquisitions… earlier it was about global ambition; today it’s more a strategic necessity to stay competitive and de-risk supply chains.”
— Bhavesh Shah, Managing Director, Equirus Capital

Sun Pharma’s Organon deal illustrates the logic neatly. Organon brings a branded women’s health portfolio worth roughly $600 billion globally — a segment Sun Pharma could not build organically in any reasonable timeframe. The alternative was a decade-long slog through clinical trials, regulatory filings and brand-building against entrenched incumbents. Writing an $11.75 billion cheque was the faster route to capability. Similarly, IT services firm Coforge acquired Arizona-based Encora to gain access to agentic AI capabilities, a skillset that commands massive premiums in the hiring market and cannot simply be staffed up through campus recruitment.

These are not ego buys. They are capability purchases — priced at a premium that reflects the cost of time.

The cash constraint

Yet the Sun Pharma transaction also exposes the lingering constraint on Indian M&A: the inability to use stock as acquisition currency. Even a deal this large — the biggest Indian overseas acquisition in roughly two decades — was structured entirely in cash. Mukherjea flagged the risk: an all-cash deal of this scale is “financially risky,” and the combined entity’s net debt-to-EBITDA ratio of 2.3 times is a meaningful departure from Sun Pharma’s historically net-cash balance sheet. For all the ambition, Indian acquirers still write cheques where Western peers swap shares.

That warning aside, the broader Indian corporate balance sheet is in better shape than the Sun Pharma outlier suggests. The median debt-to-EBITDA ratio for rated Indian companies sits at just 0.5 times, with interest coverage at 5 times, according to CRISIL data cited by Reuters. Investment banks are increasingly using leveraged buyout structures and limited-recourse guarantees that ring-fence parent balance sheets. This cycle is not 2007’s debt-fuelled excess — but Grant Thornton’s note that Sun Pharma’s post-deal leverage “needs monitoring” is the right posture.

The quiet hedge

Then there is the currency calculus, which adds a quiet layer of motivation to every deal. The rupee has depreciated roughly 40 per cent against the dollar per decade for the past 30 years. An Indian company that buys a dollar-denominated asset today is not just acquiring a business — it is buying a natural hedge against the structural decline of its home currency. When the rupee weakens, foreign-currency earnings translate into more rupees on the consolidated income statement. For Indian treasurers, outbound M&A is starting to look like a prudent treasury operation as much as a growth strategy.

The macro backdrop also creates a tension Delhi cannot easily resolve. The government’s Make in India narrative — and the accompanying push to attract foreign capital — runs directly counter to what corporate India is doing with its own balance sheets. Mukherjea predicts that free trade agreements currently being negotiated with the UK, the European Union and Australia could trigger “a deluge” of outbound deals, deepening the capital-allocation divide between policy rhetoric and corporate behaviour.

For now, the outbound wave is a real-time barometer of where Indian capital sees the next decade of returns — and it is not at home. The Sun Pharma integration, the FTA pipeline, and whether domestic private investment picks up from its post-Covid lethargy will determine whether this is remembered as a smart rotation or a capital flight the country could not afford.