The total value of Indian mergers & acquisitions including private equity deals in 2008 amounted to US$41.54 billion, compared to US$70.14 billion in 2007 and US$28.16 billion in 2006, according to India Watch, the quarterly review by the leading business and financial adviser Grant Thornton. The UK has been the largest target country for India's outbound M&A activity receiving a total investment value in excess of US$6.6 billion.

"Despite a decline in values between 2007 and 2008, the total value of M&A deals including private equity deals has increased by 47.5% since 2006, maintaining the positive compound annual growth rate of M&A and PE in India," says Anuj Chande, Head of Grant Thornton's South Asia Group. "Further to this, 2008 saw some landmark deals and also witnessed more billion dollar M&A deals than in 2007."

"In 2009, we see some encouraging prospects for Indian companies, which have generally remained cash rich," says Chande, who points out that these may benefit from a drop in valuation levels across the globe."

"I expect to see an increase in takeovers of UK targets by Indian companies when valuations drop further as the recession bites in the UK," says Chande, adding that Indian corporates were particularly keen on acquiring well-known British brands.

The largest outbound deal was Oil & Natural Gas Corp Videsh Ltd's acquisition of UK-based Imperial Energy Plc for approximately US$2.8 billion, followed by the Jaguar Land Rover acquisition by Tata Motors of US$2.36 billion.

"Cross-border deals made up the lion's share in Indian M&A even though their total value was 47% lower then in 2007," says Chande. In 2008, the total value of inbound deals was US$12.55 billion, as international companies acquired stakes in 86 Indian businesses. That compares to US$15.50 billion in 2007 and US$5.4 billion in 2006.

The largest of these was the Japanese-based pharmaceutical company Daiichi Sankyo's step acquisition of a 60.63% stake in Indian-based pharmaceutical company Ranbaxy for a total value of US$4.5 billion. Another notable transaction was Japanese mobile operator NTT Docomo Inc.'s acquisition of a 26% stake in Tata Teleservices Ltd for US$2.70 billion.

Over the same period, the total value of outbound deals reached US$13.19 billion, comprising 196 deals involving Indian companies acquiring businesses outside India.