India Economic Update
Milind S. Kothari
Managing Partner
BDO India

Undoubtedly, the past twelve months of the Russia-Ukraine war have reshaped the economic world like none other. Most major economies are struggling to contain high inflation rates, the shrinking size of their economies and a general mood of despair. India’s giant neighbour, China, is facing challenges with its economy which is opening up after a long COVID hiatus and consequently, the country is learning to cope with stunted economic growth.

Against this backdrop, it is commendable that India has not dropped its guard and continues with its growth momentum.

The Indian economy grew 4.4% in the December quarter, against an unfavourable base. The indication is that the overall growth momentum is softening yet not falling below expectations. The median expectation of GDP growth for FY 2024 hovers well above 6%, with the Reserve Bank of India (RBI), India’s central bank pegging the growth at 6.4%, whereas the International Monetary Fund (IMF) projecting it at 6.1%. Impressed by the reforms India has been effecting over the years, the Organisation for Economic Cooperation and Development (OECD) has revised its growth estimate from 5.7% to 5.9%. In the past, the RBI has had to raise interest rates, mostly, to keep up with the US Fed and prevent a sharp decline in the Indian rupee. However, the RBI may now halt the rate hikes and begin a reversal cycle to retain its growth momentum.  

Besides the Gross Domestic Product (GDP), other key indicators of the Indian economy also seem to be stacking up favourably. The Current Account Deficit (CAD) for this fiscal year (April 2023-March 2024) is set to be smaller than earlier estimates, with the CAD likely to drop below 3% of the GDP. The gains are supported by high services exports, moderation in oil prices, and a recent fall in import-intensive consumption demand. Once again, the Goods and Services Tax (GST) collections rose 12% to touch USD 18.30bn for the month of February 2023, indicating that economic activity has remained steady. The forex reserves rose to USD 572bn in the third week of March, which is a welcome turnaround. Another  high point is that India's goods and services exports are set to cross the USD 750bn mark, this fiscal , despite global headwinds. While merchandise exports are set to grow at 16%, the services exports are likely to clock growth exceeding 30% expectedly crossing USD 300bn this year.

Turning to Foreign Direct Investment (FDI); the inflows were dragged down by nearly 15% in the wake of elevated interest rates in key economies and a shortage of semiconductors in sectors such as automobiles and computers. However, a large number of FDI proposals are in the pipeline which means that the inflows are going to be higher in fiscal 2024. Several of these proposals are covered under the production-linked incentive schemes in sectors such as electronics, pharmaceuticals and renewables. On the other hand, frequent hikes in interest rates in economies such as the US, the EU, Singapore and Mauritius, which are also major sources of India’s FDI inflows, have prompted many investors to deploy capital in home countries.

In nearly every budget that the Indian Finance Minister has been unveiling for the past few years, an ambitious target has been set for revenue from asset monetisation. Invariably, however, this target remains underachieved for a plethora of reasons. This year, against the ambitious target of USD 20bn, the revenue ‘miss’ is currently estimated to be a whopping USD 6.70bn. The Indian Railways, the Department of Telecommunications and the Ministry of Petroleum and Natural Gas are likely to miss their targets by wide margins. On the other hand, the Ministry of Road Transport and Highways of India will meet their target while the Ministry of Mines, Ministry of Coal and Ministry of Ports, Shipping and Waterways are likely to exceed their targets.

The Bar Council of India, the parent body for legal services, finally took the leap of faith and took a reformatory step towards allowing foreign lawyers and law firms to practice and set up offices in India. Foreign law firms will now be allowed to practice foreign law and diverse international law and international arbitration matters in India on the principle of reciprocity. This move will open up corporate and transaction work undertaking, including advising clients on joint ventures, mergers and acquisitions, intellectual property matters and drafting contracts. However, restrictions will apply as regards offering advice on domestic law, participating in litigious matters or appearing before courts, tribunals, and other authorities.

The Indian economy is showing a rare resilience in a world full of uncertainties. Many reasons contribute to India’s growth story, the political stability at the Centre, the relentless pursuit of reforms, the outstanding success of digital infrastructure and the zeal of private enterprise to excel. While the going is great, there is no room for complacency as India strives to become an economic superpower.


M & A Tracker
Rajesh Thakkar
Partner and Leader

M&A Tax and Regulatory

Deal Advisory Services

M&A in India

Between 30 January 2023 and 30 March 2023, around 103 M&A deals were announced, of which 52 M&A deals were closed. The aggregate value of deals announced was USD 2,059.15mn; dominated by 84 domestic deals (USD 1,151.34mn) and 19 cross border deals (USD 907.8mn).

In terms of sectors (considering only closed deals), the Information Technology sector saw deals worth USD 170.9mn, followed by the Consumer Discretionary sector with deals worth USD 152.58mn and the Healthcare sector with deals worth USD 63.76mn.

Significant deals closed between 30 January 2023 and 30 March 2023

Target Company
Quant Systems Inc.
Acquiring Company
Sonata Software Limited
Deal Value (in mn USD)
Information Technology
  • Sonata Software Limited (Sonata), via its subsidiary Sonata Software North America Inc., acquired Quant Systems Inc. for USD 160mn (INR 13.23bn)
  • The consideration includes an upfront payment of USD 65mn, deferred achievement-based earn-out/ pay-outs up to a maximum of USD 95mn payable over 2 years, and certain additional payments on achievement of additional targets
  • The acquisition would accelerate Sonata’s capabilities in Enterprise Data Analytics, Cloud Modernisation, Cyber Security, Salesforce, Data Privacy, Adobe, Snowflake, and Digital and Mobile App solutions
  • Post transaction, Quant Systems Inc. will operate as a subsidiary of Sonata
Target Company
Campus Activewear Limited
Acquiring Company
Not Available
Deal Value (in mn USD)
Consumer Discretionary
  • TPG Capital, through TPG Growth III SF Pte Limited, sold 2,32,07,692 equity shares, representing 7.61% stake in Campus Activewear Limited for USD 97.52mn (INR 8.05bn) through NSE bulk deal in the open market
  • Post transaction, the fund has made a complete exit from the company
Target Company
Vasan Health Care Private Limited
Acquiring Company
ASG Hospital Private Limited
Deal Value (in mn USD)
  • ASG Hospital Private Limited (ASG Hospital) acquired Vasan Health Care Private Limited (Vasan Health) for USD 63.76mn (INR 5.26bn) under the Insolvency & Bankruptcy Code
  • According to the resolution plan, which was approved by the Chennai bench of the National Company Law Tribunal, USD 47.76mn would be utilised towards paying all stakeholders of Vasan Health, including creditors, while the remaining USD 15.27mn would be spent towards working capital and capex infusion into the company
  • The acquisition has expanded ASG Hospitals' network to over 150 hospitals across the country

Significant deals announced between 30 January 2023 and 30 March 2023, but not closed

Target Company
SAS Autosystemtechnik GmbH
Acquiring Company
Samvardhana Motherson International Limited
Deal Value (in mn USD)
  • Samvardhana Motherson International Limited (Samvardhana), via its subsidiary Samvardhana Motherson Automotive Systems Group BV, is acquiring SAS Autosystemtechnik GmbH (SAS Autosystemtechnik) for USD 575.52mn (INR 47.65bn) from Faurecia
  • As part of the transaction, SAS will onboard over 5,000 new members in the Samvardhana Motherson family
  • The acquisition will help Samvardhana enhance integration in the automotive supply chain, thereby increasing customer proximity and product diversification across customers, products, and geography with increased exposure to electric vehicle programmes
  • The transaction is expected to be closed within five to eight months
  • Post transaction, SAS Autosystemtechnik will operate as a subsidiary of Samvardhana Motherson Automotive Systems Group BV and a step-down subsidiary of Samvardhana
Target Company
JBF Petrochemicals Limited
Acquiring Company
GAIL India Limited
Deal Value (in mn USD)
  • GAIL India Limited (GAIL) acquired JBF Petrochemicals Limited (JBF Petrochemicals) for USD 256.15mn (INR 21bn) under the Insolvency & Bankruptcy Code
  • The sale of JBF Petrochemicals will equate to a 41% recovery for financial creditors
  • With this deal, GAIL became the second public sector undertaking after Indian Oil Corporation, which decided to take over another bankrupt private sector company through the Insolvency & Bankruptcy Code route
  • Post transaction, JBF Petrochemicals will operate as a subsidiary of GAIL
Target Company
Mayne Pharma Group Limited, U.S. Generic Prescription Product Portfolio
Acquiring Company
Dr. Reddy’s Laboratories Limited
Deal Value (in mn USD)
  • Dr. Reddy’s Laboratories Limited (Dr. Reddy's), via its subsidiary Dr. Reddy's Laboratories SA, is acquiring the U.S. Generic Prescription Product Portfolio of Mayne Pharma Group Limited for USD 105mn (INR 8.71mn)
  • The consideration includes an upfront payment of approximately USD 90mn in cash, contingent payments of up to USD 15mn, consideration towards inventory, and credits for certain accrued channel liabilities to be determined on the closing date
  • The closing of the transaction is subject to the satisfactory completion of conditions, including the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the law of the United States
Feature Story
Ashish Bagadia
Partner/ Corporate Finance and Investment Banking
BDO India

The EV drive in India – Small vehicles making a big difference

India is the third-largest automobile market and the second-largest 2-wheeler (2W) market in the world today. 2Ws contribute to around three-fourths of the total automobile volumes in India with ~15.4mn 2W units sold in 2022. This number is expected to reach 42mn by 2027, at a CAGR of 22%. This growth is significantly driven by the expected growth of the quick commerce industry in the country.

Its young population and high internet penetration make India one of the fastest-growing e-commerce markets in the world. The Indian quick commerce industry is expected to grow ~15x from 2022 to 2025. While the delivery cost is ~15% in mainstream e-commerce, it is ~10% for quick commerce.

The quick commerce segment is very sensitive to logistics costs. Since India imports 80% of its crude oil requirements, fluctuations in fuel prices critically affect the unit economics for the quick commerce industry. EV 2Ws in the commercial segment have already achieved a total cost of ownership that is comparable to Internal Combustion Engine (ICE) 2Ws. Thus, to ensure margin protection and stability, last-mile delivery players are opting for EV 2Ws. Congested driving lanes, rapidly developing battery-swapping infrastructure, a large number of zip codes in cities and towns, etc., are further aiding the adoption of these 2Ws.

Zomato, one of the largest players in the quick commerce space in India, uses around 0.35mn delivery partners in its food delivery business alone, and this number is growing at 100%+ CAGR. This growth rate is expected to accelerate further on the back of overall growth anticipated in the quick commerce industry. The organisation has joined The Climate Group’s EV100 initiative and is committed to 100% adoption of EVs by 2030. Similarly, almost all the quick commerce and last-mile delivery players are going the EV way.

In 2022, only 0.6mn EV 2Ws were sold in India, making up ~4% of the total 2Ws sold and ~62% of the total EVs sold in the country. EV 2Ws are expected to form over 80% of the overall 2W sales in 2030, delivering more than 40mn  units per annum. This presents one of the largest and fastest-growing EV opportunities in the world.

Currently, the cost for ~50% of the EV 2Ws is made up of imported components. Taking stock of the need to reduce import dependence and to indigenise the technology, the Government of India is pushing for ‘Make in India’, including the provision of various incentives. So far, this opportunity has not been fully leveraged by international players.

India has significant participation from Japanese players like Honda, Yamaha, Suzuki, etc., in the ICE 2W market. It is well-established that the market requires long-term commitments to provide a sustainable business case. First-mover advantage provides a significant moat in the Indian market, especially for international players. Considering that Indian EV players, both OEMs and component manufacturers, are scouting for capital and technologies, this is the appropriate time for global players to forge partnerships and enter one of the most promising EV markets in the world.

Guest Column
Anant Badjatya
SUN Mobility

Battery swapping can give wings to EV adoption in India

If you are considering an EV for business or personal use, six key issues would inadvertently determine your decision:  High Upfront Costs, Range Anxiety, Charging Infrastructure, Long Charging Times, Technological Obsolescence and Safety.

Battery swapping, by decoupling the battery from the vehicle and providing a more efficient and safe charging infrastructure, can address these issues and help expedite EV adoption.

High Upfront Costs and Range Anxiety: Battery swapping endeavours to give the same experience to customers as Internal Combustion Engine (ICE) vehicles – An EV user goes to a battery swapping station when their vehicle cluster shows that the battery is low on charge and exchanges it for a charged battery from the swapping station and moves on.

The entire process takes less than three minutes. Long charging times are prevented by removing the need to charge; range anxiety is solved as one gets unlimited range with swaps; and high upfront costs are managed as the battery is removed from the vehicle.

Having said that, the issues around charging infrastructure, technological obsolescence and safety need a bit more elaboration.  

Charging Infrastructure: Swapping stations show a much better utilisation of both time and space than a normal fixed battery charge point. They are better suited for tier 1 and tier 2 cities where one does not want to queue up and wait for their vehicles to charge. Data-analytics-led placement of these stations in a city can ensure adequate coverage. What Gogoro, the world’s largest swapping company has done in Taiwan or SUN Mobility, India’s largest swapping company has done in Delhi, are good examples. In India, SUN Mobility has many stations doing more than 150-160 swaps per day. SUN Mobility is working to set up 30,000 stations across India by 2027 to cater to two million vehicles on its platform by that time. 

Technological Obsolescence: An average customer is wary of the state and pace of technology and innovation around batteries. It is a constant concern, if waiting would help one buy a faster charging, higher range, and cheaper EV. One wants to wait till there is some plateauing of these key determinants. However, with battery swapping, since the customer is buying the vehicle sans the battery and the upgrades to the battery are backward compatible, they are not worried about battery replacement and associated warranties.

Safety and Longevity: As part of the battery-swapping solution, the batteries are charged in a highly regulated manner and environment (including some companies even managing temperature-controlled environments)  against a fixed battery solution, where charging can happen in an unregulated manner and place. The batteries last longer and better if charging is disciplined. Most of the untoward EV fire incidents that drew headlines recently in India happened during charging; a few of them happened inside homes.

With the above advantages, coupled with a Total Cost of Ownership (TCO) which is at least 20% better than ICEs or fixed-battery vehicles across all form factors viz. 2-wheeler bikes, e-Rickshaws, 3-wheeler autos or loaders, battery swapping does offer a very compelling mobility solution.

While battery swapping is getting its due recognition now, it took its time to arrive. Inter alia, including educating the users about this novel solution, it is important to consider that this is a complex solution with a significant infrastructure and partner ecosystem play. To increase market penetration, a battery-swapping operator will need to work with multiple Original Equipment Manufacturer (OEMs) and infrastructure partners to ensure acceptable and reliable services.

Expert Reel
The Times of India

The Government of India has taken numerous initiatives to promote India’s EV ecosystem. A case in point is remodelling of the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme for consumers. Walk into any car showroom and you’re likely to see EV models on display. That’s because consumers too are increasingly buying EVs and manufacturers are stepping up to meet this growing demand. Beyond a clean environment, more EVs will mean more jobs, a robust manufacturing sector and an increase in foreign direct investment.

Watch the video to know how electric vehicles can shape the future of mobility in India.


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