Indian Companies Accelerate Foreign Asset Purchases Amid Economic Slowdown
Indian conglomerates are buying up foreign companies, with the largest deal being Sun Pharmaceuticals' acquisition of US-based Organon & Co for $11.75 billion. Over the past year, 162 Indian firms invested more than $18 billion in foreign assets, up 34%.
Indian Capital Flees West: Why the Domestic Economic Slowdown Has Become a Catalyst for Global Expansion
You've seen the headlines: Indian companies are buying foreign assets at record rates, with Sun Pharmaceuticals' $11.75 billion deal for Organon being the largest in two decades. The official narrative is "strategic expansion" and "access to technology." But the reality is far deeper and more troubling for the Indian economy.
[The Core]: What's Really Happening
Non-obvious insight: Indian capital is fleeing the country not despite, but because of government efforts to boost domestic investment. Tax breaks and production subsidies have failed to turn the tide, and businesses are voting with their feet—or rather, with their dollars.
The numbers speak for themselves. According to Grant Thornton data, 162 Indian companies spent over $18 billion on foreign acquisitions in 2025—34% more than the previous year. And in the first four months of 2026, the volume has already reached $17.3 billion, with nearly 70% of that amount coming from the Sun Pharma deal.
The paradox is that this is happening amid intense government pressure on businesses to invest domestically. India's Chief Economic Adviser V. Anantha Nageswaran recently admitted at a conference: "Corporate profits of the top 500 companies have grown 30.8% annually since the pandemic, but the overall level of private capital investment remains disappointing."
Timeline and Context
April 2026 — Sun Pharma signs the final agreement to acquire Organon, offering US shareholders $14 per share—a premium of over 24% to the market price. The financing structure includes $2-2.5 billion of Sun Pharma's own funds, $3-4 billion in offshore loans, and potential debt exchanges.
May 2026 — BBC publishes an investigation where experts directly link the wave of acquisitions to India's economic slowdown and deteriorating business climate.
May 24-27, 2026 — The news is actively discussed in global media, drawing attention to structural problems in the Indian economy.
Who Wins and Who Loses
Winner #1 — Sun Pharma. The deal propels the company into the top 25 global pharmaceutical manufacturers with combined revenue of $12.4 billion. It becomes the third player in the global women's health segment and the seventh largest biosimilar manufacturer worldwide. Post-deal leverage is only 2.3x Net Debt/EBITDA—a comfortable level.
Winner #2 — Indian IT companies. Coforge buys Encora for $2.35 billion, Infosys acquires Optimum Healthcare for $465 million, Wipro takes Mindsprint for $375 million. For them, foreign deals are a way to quickly gain AI capabilities and dollar-denominated revenue, which hedges against the depreciating rupee.
Winner #3 — Organon shareholders. The company's stock rose 15% after the deal announcement. They get $14 in cash per share—a decent exit for a business that posted a net loss of $205 million in Q4 2025.
Loser #1 — The Indian economy. Capital outflow over the year exceeded $18 billion from M&A deals alone, not counting direct investments in greenfield projects abroad. Saurabh Mukherjea of Marcellus Investment Managers says bluntly: "Even among companies in our portfolio, many are building factories in the US, where industrial land is nearly free and working capital is much easier to obtain than here."
Loser #2 — Small and medium Indian companies that cannot afford to go global. They remain in India and must compete for a shrinking pool of domestic demand. Market consolidation will accelerate, and many may be acquired or exit the market.
What the Media Isn't Saying
The main omission: the rise in foreign acquisitions is not a sign of strength in the Indian economy, but a marker of its structural weakness.
Note the words of Sumit Abrol from Grant Thornton: "We could exceed $15 billion in deal value in the first half of this year alone." This means the annual pace could reach $30 billion or more—an all-time record.
But why is this happening now? Experts interviewed by BBC cite three key reasons:
- Disappointment with the domestic business climate. Despite tax breaks and production subsidies, bureaucratic barriers and difficulty obtaining financing remain serious issues.
- Desire to diversify supply chains. Amid global uncertainty over tariffs and geopolitical risks, Indian companies seek to establish production bases abroad.
- Access to technology and brands. Building AI capabilities or a biosimilar business from scratch would take years—it's easier to buy an established player in the West.
And second, what officials are silent about: the Indian government is losing the battle for private investment. The Chief Economic Adviser publicly admitted that private sector capital formation is "disappointing." This is a rare case where a top official effectively confirms the failure of stimulus policy.
Mukherjea of Marcellus gives a devastating example: "Tata Steel still carries the Corus Steel acquisition like an albatross around its neck—for decades." That is, Indian businessmen are well aware of the risks of foreign acquisitions, but they still go for them—so bad are the conditions at home.
Forecast: Next 30 Days and 90 Days
30 days (until June 27). The Sun Pharma-Organon deal will continue to receive regulatory approvals. Positive signals from US and EU antitrust authorities are expected, supporting Sun Pharma's stock (current post-announcement growth is about 5-7%). Other Indian companies—especially in IT and pharma—may announce new small and medium acquisitions. The Indian rupee will remain under pressure (likely weakening 0.5-1% against the dollar due to capital outflows).
90 days (until August 27). Total foreign deal volume by Indian companies will exceed $25 billion in the first half of 2026. Market attention will shift to how Sun Pharma integrates Organon—any hint of difficulties could crash the stock by 10-15%. Several mid-sized Indian companies will announce plans to build factories in the US and Europe, continuing the trend noted by Mukherjea.
The Indian government will likely announce a new package of measures to stimulate domestic investment—but experts will be skeptical given past failures. The rupee could weaken to 87-88 per dollar (from current ~83-84) amid continued capital outflows.
Editorial Forecast
Asset: Sun Pharma shares (NSE: SUNPHARMA). Direction: moderate growth over the next 24–72 hours of 2-3% due to the absence of negative news on regulatory approvals. Key levels: support — INR 1,520, resistance — INR 1,580. Confidence level: medium (55%). Main risk: if any regulator (US FTC or European Commission) requests additional information on the deal, it will raise concerns about delays, and shares could fall 4-5% in a single day. Watch for news from Washington and Brussels on May 28-29. This is an editorial opinion, not an investment recommendation.
— Editorial Team
