India Economic Update
Milind S. Kothari
Managing Partner
BDO India

India concluded voting for the largest-ever elections, recording the highest voter turnout in the world with 642 million eligible Indians voting. The incumbent, the Bhartiya Janata Party (BJP) is set to embark on its third consecutive mandate albeit through a coalition government, under the continued leadership of Prime Minister, Mr Narendra Modi. The new Government that will be sworn in will have the formidable challenge of managing a staggering economy that is sprinting to race past USD 5tn by 2027-28.

India's GDP growth is on momentum to deliver 7.8% growth, the highest among the world's large economies. This upward trend is not just a statistic, but a beacon of hope, as India aspires to become the third-largest economy by 2030, surpassing Japan and Germany.

The progress is palpable on the ground. Nearly every high-frequency growth parameter is delivering a new high. The share of global electricity from renewables rose to 30% last year as wind and solar power growth continued to exceed that of fossil fuels. In the process, India overtook Japan to become the world’s third-largest solar power generator last year. India also became the first country to receive USD 100bn in remittance with its nearly 18 million emigrants, the highest amongst all nations.

For long, India seemed to have underinvested in building world-class infrastructure, however, the story unfolding in recent years has been different. Covering the large expanse of the country, the Indian Railways loaded the highest-ever freight, electrified 7,188 route km, laid new lines at 14.5 km per day, and replaced 5,950 km of tracks. The National Highways Authority of India, responsible for the road network spent USD 25bn on the construction of national highways, the highest capital expenditure so far surpassing the previous year's statistics by 20%.

Meanwhile, the tax collections remain buoyant, with both the Direct and Indirect tax collections breaking new records. The Direct tax collections surged 17.7% year-on-year to USD 236bn, exceeding the budget estimate by USD 16bn and even the revised mid-year estimate by USD 1.56bn. The Indirect tax collection for April 2024, for the first time, shot past USD 25bn, breaking the psychological barrier of INR 2 lac crore, a first since the introduction of the Goods & Services Tax (GST), a one-nation-one-tax levy introduced in 2017.

However, the big surprise was the windfall of USD 25bn for the Government that the Reserve Bank of India (RBI), India’s central bank, declared as a ‘dividend’ for the financial year 2023-24, more than double the amount budgeted. The surplus transfer will help bulge the resource availability to pursue enhanced expenditures or a sharper fiscal consolidation than anticipated only a few months ago in the pre-polls budget passed in February.

It is always interesting to witness a new trend promising a paradigm shift. One such trend is the reverse flip by Indian start-ups that conventionally chose to opt for the holding company to be based out of the US or Singapore. The decision to flip, or reverse flip, is shaped by outbound and inbound investment rules, apart from tax implications. The overriding consideration is the valuation before and after listing, which, in the case of the Indian start-ups, remains too small to generate institutional investor interest abroad. Therefore, the start-ups are choosing the reverse flip to return home with their holding structures.

Another pleasant turn of events is noticed in the manufacturing of defence equipment which reached USD 2.54bn from next to nothing only a few years ago. This increase is a direct result of the reformist policies instituted by the Government, based on critical factors such as reduced dependence on foreign equipment, a greater thrust towards tapping into the capabilities of domestic defence PSUs, and the emergence of Indian private companies and start-ups as part of the Atmanirbhar Bharat (self-reliant India) initiative, led by the Government.

On the back of heady valuations, the Indian capital market achieved a significant milestone, with its market capitalisation crossing the USD 5tn mark. The most heartening feature of this growth in wealth has been the fall in the share of foreign institutional ownership from 19.13% to 16.51%, accompanied by a corresponding rise in domestic ownership that signals that the Indian capital market is not driven by only foreign money. The expansion of the capital market allows companies to raise capital to innovate, expand, and compete globally.

While the excitement continues, the entire country is looking forward to the formation of the new Government with hopes and expectations for the future. The next decade will be decisive in getting closer to the dream of becoming a developed country by 2047 when India completes 100 years of independence! Meanwhile, the scorching summer, the intense heat wave,  and politics seem to preoccupy mind space.

M & A Tracker
Rajesh Thakkar
Partner and Leader

M&A Tax and Regulatory

Deal Advisory Services

M&A in India

Between 01 April 2024 to 30 May 2024, around 118 M&A deals were announced of which 45 M&A deals were closed. The aggregate value of deals announced is USD 2,715.14mn; dominated by 95 domestic deals (USD 1795.15mn) and 23 cross-border deals (USD 919.99mn).

In terms of sectors (considering only closed deals), Industrials sector saw deals worth USD 232.43mn, followed by Financials sector with deals worth USD 173.23mn and Healthcare sector with deals worth USD 100mn.

Significant deals closed between 01 April 2024 to 30 May 2024

Target Company
Essar Transco Limited
Acquiring Company
Adani Transmission Step Two Limited
Deal Value (in mn USD)
  • Adani Energy Solutions Limited via its subsidiary Adani Transmission Step Two Limited acquired Essar Transco Limited for USD 227.49mn (INR 19bn) in an all-cash deal.
  • The acquisition is in line with the company’s value-added growth strategy through organic as well as inorganic growth opportunities.
  • Post the transaction, Essar Transco Limited would operate as a subsidiary of Adani Energy Solutions Limited.
Target Company
Dr. Reddy's Venezuela C.A.
Acquiring Company
Kuraduria Holdings Corp
Deal Value (in mn USD)
  • Kuraduria Holdings Corp acquired Dr Reddy’s Venezuela C.A. for USD 100mn (INR 8.33bn) from Dr. Reddy’s Laboratories Limited.
  • Post the transaction, Dr. Reddy’s Venezuela C.A. would operate as a subsidiary of Kuraduria Holdings Corp.
Target Company
Sky Forest Projects Private Limited
Acquiring Company
Indiabulls Constructions Limited
Deal Value (in mn USD)
  • Indiabulls Constructions Limited acquired Sky Forest Projects Private Limited for USD 77.54mn (INR 6.47bn) in an all-cash deal for a consideration of INR 867mn.
  • The acquisition would expand the company’s presence in Mumbai and is expected to lead to synergies and add value for all the stakeholders.
  • Post the transaction, Sky Forest Projects Private Limited would operate as a subsidiary of Indiabulls Real Estate Limited.

Significant deals announced between 01 April 2024 to 30 May 2024, but not closed

Target Company
Intech GMBH
Acquiring Company
Infosys Limited
Deal Value (in mn USD)
Information Technology
  • Infosys Limited (Infosys) is acquiring Intech GMBH for USD 477.94mn (INR 39.95bn) in an all-cash deal.
  • The investment further strengthens Infosys’ Engineering R&D capabilities and reaffirms its continued commitment to global clients to navigate its digital engineering journey.
  • The transaction is expected to close during the first half of the fiscal year 2025, subject to customary closing conditions and approvals from regulatory authorities in Germany, Romania, Austria, India, and such other regulatory approvals as may be required.
  • Post the transaction, Intech GMBH will operate as a subsidiary of Infosys Limited.
Target Company
Arjas Steel Private Limited
Acquiring Company
The Sandur Manganese and Iron Ores Limited
Deal Value (in mn USD)
  • The Sandur Manganese and Iron Ores Limited (Sandur Manganese) and BAG Holdings Private Limited are acquiring a 99.12% stake in Arjas Steel Private Limited for USD 360.06mn (INR 30bn) in an all-cash deal.
  • The acquisition marks Sandur Manganese’s foray into manufacturing special steels and value-added products unlocking the potential for numerous synergies and integration.
  • The transaction is expected to be completed within seven months, subject to the closing conditions of the Share Purchase Agreement (SPA) and approval of the Competition Commission of India.
  • Post the transaction, Arjas Steel Private Limited will operate as a subsidiary of The Sandur Manganese and Iron Ores Limited.
Target Company
Cigniti Technologies Limited
Acquiring Company
Coforge Limited
Deal Value (in mn USD)
Information Technology
  • Coforge Limited (Coforge) entered into an agreement to acquire 76.66% stake in Cigniti Technologies Limited for USD 355.85mn (INR 29.70bn) through a share purchase agreement followed by an Open Offer.
  • Coforge acquired in tranches as below:
    • Acquired 13,830,091 Equity Shares representing a 50.66% share at a price of INR 1,415 per share for INR 19.56bn from promoters and shareholders of the company.
    • Open offer to acquire 7,162,210 equity shares representing a 26% stake at a price of INR 1,415 per share from public shareholders of the company.
  • This acquisition will help Coforge to expand its capabilities across the Retail, Hi-Tech/ISV and Healthcare verticals and scale up its clientele presence across the Southwest, Midwest, and Western US markets.
  • Post the transaction, the buyer will hold 20,992,301 equity shares representing a 76.66% stake in the company.
Feature Story
Rohin Kapoor
Partner, Education & Skilling Management Consulting

The Golden Road: India’s dynamic education and skilling sector headed for robust growth

India boasts of being the second largest education system in the world with over 275 million and 45 million students enrolled in K12 and higher education segments respectively. As per the latest figures, India has over 1.5 million schools, 1200 universities and 50,000 colleges with the numbers expected to multiply in the years ahead.

In 2023, India surpassed all other countries to become the most populous country and is currently home to 580 million people in the age group of 5-24 years, thereby presenting the most attractive opportunity for foreign and domestic investors in the sector. By 2027, the total size of the education sector is estimated to be about USD 260bn with 20%+ CAGR projected in the near term.

Structure and regulatory overview

The entire journey encompassing pre-school to executive education is covered within the sector’s ambit. Private investment in the formal education sector (schools, universities and colleges) was only permitted as a not-for-profit philanthropic activity until very recently. Last year, for-profit foreign investment was made permissible under the automatic route in the higher education sector. Options in K12 for setting up for-profit operations also exist subject to certain conditions.

National Education Policy 2020

The recent liberalisation of the sector and the announcement of policies to attract foreign investment have been envisaged in the National Education Policy 2020. The key provisions are:

  • Universalisation of education from pre-school to secondary level with 100% Gross Enrolment Ratio (GER) in school education by 2030
  • Liberalising Indian private schools by building relevant curricula, integrating technology and focussing on cognitive skill development
  • Attracting private and foreign investments in the higher education segment to achieve the GER target of 50% by 2035
  • Multidisciplinary Education and Research Universities to be set up as models of best education of global standards in the country

Foreign Direct Investment (FDI) Policy

FDI up to 100% is now permitted under the automatic route in the education sector, however, a deep understanding of the regulatory landscape and effective structuring of investment is critical to building ‘for-profit’ operations. Additionally, FDI up to 100% is also permitted in vocational education and EdTech.

Physical global university campuses in India

The Government of India has permitted the top 500 universities and institutions globally to set up physical campuses at Gift City, or in the rest of the country under the ‘for-profit’ mode subject to regulatory approval. Joint ventures with other academic institutions or strategic partners to diversify risk are also permitted.

Complete flexibility and autonomy have been provided to foreign universities in terms of courses, tuition fees, recruitment, pedagogy, research and profit repatriation. Two Australian universities have already commenced operations and a few American and European universities are expected to announce India entry plans soon.

Vocational education and skill development sector

India has embarked on an ambitious journey of transforming into a global human resource powerhouse with the unique ability to cater to the demand for skilled manpower globally. The country’s existing prowess in software and AI-related fields is expected to contribute significantly to its efforts to train and upskill millions in the future.

Physical infrastructure for skill development in the form of Industrial Training Institutes (ITIs) and Information Technology Centres (ITCs) has improved significantly through funding support from the Government and the private sector. Several start-ups have joined hands with academic institutions to provide vocational education programmes to blue- and white-collar employees.

Given the massive size, future potential and growth of its education and skilling sector, India is becoming an attractive investment destination for investors both foreign and domestic.

Guest Column
Prof. Atul Khosla
Independent Director; Regional Vice Co-Chair, National Education Council - ASSOCHAM; CII State Council Member for Education
Vice Chancellor, Shoolini University

India – Decoding the potential of the next global education hub

India stands at a major inflexion point of economic growth. However, the vision of ‘Viksit Bharat’ (Developed India), or becoming a USD 10tn economy, can only be achieved by building sizeable talent to deliver this growth. It is estimated that the climb from a USD 4tn economy to a USD 10tn economy will need an additional three million leaders in various fields including science, business, and technical.

To achieve this, India would need to address the capacity issue by enabling its education sector to impart capabilities that create a global workforce and deliver global leadership. This would be possible by building top-tier universities and institutions, in addition to the government’s endeavours with premier institutions like the Indian Institutes of Technology (IITs) and National Institutes of Technology (NITs). A sizeable effort in this direction has already begun within the private sector where some top-tier universities have emerged, fundamentally challenging the status quo in fields from liberal arts to research.

The second challenge is delivering consistently superior education across the 1200 universities in the country, or at least half that number. Now that the Indian government has opened the gates for global universities, the country’s existing universities would need to transform and upscale to compete with the experience and talent of these universities. To take an example from the automobile industry, when Maruti was launched in India, the then leaders, Ambassador and Fiat, had the option to either upgrade or be outdone. Similarly, the arrival of global universities is expected to transform the overall higher education system within the country.

An important feat that could be parallelly achieved is retaining Indian students within Indian institutions. A significant number of Indian students move to other countries for their higher education. According to an estimate, one million students move abroad every year, leading to a significant outflow of foreign exchange. Developing higher education within India at par with global standards may reduce this movement of talent outside the country.

Lastly, efforts in innovation and research need to be enhanced to revamp higher education. Historically, India has been more of a transactional economy and needs to build research and innovation capabilities into its higher education - this action needs to be executed on a war footing. The Government is taking steps such as setting up Atal Incubation Centres - under Atal Innovation Mission, the Indian government’s flagship initiative to promote a culture of innovation - and the incoming private capital will complement these endeavours. It can transform India’s higher education ecosystem into an incubation ecosystem, fostering knowledge, creativity and skill development more aligned with the real world. The arrival of global universities will add to this transformation.

For India to achieve its vision of becoming a ‘Vishwaguru’ – becoming a global destination for education – the disruption of higher education and the establishment of top-tier universities are indispensable. Like the country’s evolution as one of the significant IT hubs of the world, India has the potential to become a global education hub through the internationalisation of its higher education.

Expert Reel

As India’s education sector undergoes a significant transformation, supported by policy and regulatory changes and key disruptions like EdTech, the dynamics of education vis-à-vis the economy, employment and the future workforce are a crucial subject of expert discussions. In this direction, the new rules released by India's University Grants Commission (UGC) will play an important role in shaping the country's education ecosystem. In this video, Madan Pillutla, Dean, Indian School of Business, talks about the possible outcomes of the new rules issued by the UGC for foreign universities to set up in India. Watch it here.


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