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Cross border M&A between India and the European Union requires companies to navigate a mix of Indian laws such as the Companies Act, FEMA rules, SEBI regulations and the Competition Act, along with the EU Merger Regulation, national merger control rules in countries like France and Germany, GDPR obligations and foreign investment screening. These transactions also bring practical challenges around data sharing, valuation, currency exposure, tax treatment and aligning negotiation styles across jurisdictions. A well-structured dual-jurisdiction due diligence process is essential because it uncovers regulatory triggers, competition filings, data protection risks and commercial gaps early in the deal. To understand how these rules fit together and what investors should expect at each stage, the full guide below breaks down the entire India–EU M&A framework in detail.

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INTRODUCTION

Cross border deals between India and the European Union have picked up at a steady pace, and it’s no longer just the big names doing the heavy lifting. Investors, founders, and mid-sized companies on both sides now see real value in partnering across markets. India pulled in USD 81.04 billion in FDI during FY 2024–25, as recorded in the latest fact sheet issued by the Department for Promotion of Industry and Internal Trade. A sizeable part of that capital came from Europe, with the Netherlands, Germany, France, and Luxembourg continuing to show strong interest in technology, manufacturing, clean energy, and consumer-facing businesses.

Trade numbers point in the same direction. The European Commission reports that EU–India trade now sits at over EUR 120 billion which is a good sign of how closely the two markets are already connected. For European investors, India offers growth and regulatory stability. For Indian companies, Europe is a way to leapfrog on technology, IP, and advanced manufacturing.

Outbound activity has also become more intentional. A noticeable chunk of that is going into European EV technology, pharma, engineering design, and digital services. These are strategic bets, not one-off deals.

All this is happening alongside rising activity with the UAE, the US, and Australia, so India is now part of a much wider M&A network instead of just being a domestic market for foreign capital. Companies on both sides expect a certain level of discipline in how information is shared, how diligence is run, and how the regulatory roadmap is handled.

What really gives comfort in EU–India deals is the predictability of the legal environment. In India, the Ministry of Corporate Affairs, SEBI, RBI, and the Competition Commission of India play a central role in keeping the process consistent and rule-based. Europe brings its own structure through the EU Merger Regulation and the European Commission’s competition review system. When you put both systems together, you get a corridor that is strict but stable, which is exactly what cross border investors want.

This is the backdrop for international M&A today. Whether it’s an acquisition in India or an Indian company looking outward, the real work lies in how well the deal is structured, how early the regulatory issues are flagged, and how cleanly due diligence is executed.

WHAT IS CROSS-BORDER M&A AND WHY IT IS LEGALLY COMPLEX

Cross border M&A is any transaction where a company in one country buys or merges with a company in another. Businesses choose these deals to enter new markets, acquire technology, expand their product lines, or strengthen their global position. The idea is straightforward, but the moment two countries are involved, the process becomes far more detailed than a normal domestic transaction.

Most cross border deals follow a few basic structures. A share purchase is the simplest approach, where the buyer acquires shares from the existing owners. An asset purchase allows the buyer to select specific assets, contracts, intellectual property, or business units. Full mergers combine two companies into one, either through absorption or by forming a new entity. Companies also use joint ventures or business transfers when the deal requires more flexibility.

The complexity comes from managing two legal systems at the same time. Each country has its own corporate rules, foreign investment laws, merger control requirements, tax regulations, and accounting standards. Even a simple acquisition can require multiple filings, approvals, and compliance steps in both jurisdictions.

Regulatory timing is one of the main challenges. A deal may require a merger filing in India even if it does not trigger a filing in the European Union, or it may require separate filings in individual EU member states. Each authority follows its own review timeline. Parties cannot close the transaction until all approvals are complete.

Data and intellectual property rules add another layer. A European company usually handles the personal data of EU residents, which brings GDPR into focus. This affects how information can be shared in the data room and what controls must be in place during diligence. IP ownership, licensing restrictions, and technology transfer rules must also be reviewed carefully.

Tax considerations can influence the entire structure as well. Capital gains, withholding taxes, and indirect tax treatment vary across jurisdictions. Without proper planning, a deal that looks commercially sound may turn out to be inefficient from a tax perspective.

For all these reasons, cross border M&A requires more preparation, clearer documentation, and stronger coordination than domestic deals. When planned well, these transactions help companies grow faster and operate on a global scale. When planned poorly, they lead to delays, regulatory issues, and unexpected costs.

LEGAL FRAMEWORK IN INDIA

When a deal crosses into India, the legal landscape becomes an important part of the strategy. It is not about filing forms or ticking boxes. It is about understanding how India’s laws shape the deal, how regulators think, and how the approval path will influence timing, valuation, and risk.

Think of the Indian framework as four pillars that hold up any cross border transaction.

1. The Companies Act

Every merger involving an Indian company passes through the Companies Act, 2013. This is where the transaction receives its legal legitimacy. The National Company Law Tribunal reviews the merger and asks simple but essential questions:

·      Do shareholders and creditors actually support this deal

·      Is the valuation fair and justified

·      Does the structure make sense from a public-interest standpoint

If the tribunal wants clarity, it will ask for it. If something does not look right, it will send the parties back to fix it. This is why companies prepare their scheme documents with care. The tribunal’s approval is what converts a business idea into a recognised merger.

2. Competition Law

Cross border deals often trigger India’s competition rules even when India is a small part of the global business. Under the Competition Act, 2002, large transactions must be filed with the Competition Commission of India. The CCI looks at the same things every investor cares about:

·      Will the deal reduce competition

·      Do the parties overlap in the market

·      Will consumers be affected

The interesting part is the green channel route. If the parties have no overlaps in India, the combination is approved automatically on filing. For many global transactions, this route saves weeks of waiting and removes uncertainty.

3. SEBI

If the target is listed, the rules change. The SEBI Takeover Regulations protect retail and institutional investors. Once an acquirer crosses the prescribed shareholding level, they must make an open offer.

This means:

·      A clear offer price

·      Defined timelines

·      Full disclosures to the stock exchange

·      A transparent exit for minority shareholders

Foreign acquirers often underestimate how precise these rules are. In practice, the takeover code becomes a project of its own inside a larger M&A deal.

4. FEMA and RBI

FEMA and the RBI’s regulations decide how foreign investment enters India. They control:

·      Whether the sector is open for foreign investment

·      Whether the deal is automatic or requires government approval

·      What valuation model must be used

·      How consideration should be paid

·      What filings must be done after investment

Even a basic share transfer from an Indian seller to a foreign buyer has to follow FEMA pricing guidelines. If the sector is sensitive, the scrutiny goes up.

5. A unique feature: India actually allows cross-border mergers

India is one of the few large markets where inbound and outbound cross border mergers are recognised by law. An Indian company can merge into a foreign company, and a foreign company can merge into India, but only with jurisdictions that the government has approved. This prevents mergers into poorly regulated or opaque financial centres while still giving businesses global flexibility.

LEGAL FRAMEWORK IN THE EU

EU Merger Regulation and the Role of the European Commission

The EU Merger Regulation is the central law that governs large mergers and acquisitions in Europe. When the companies involved cross certain turnover thresholds, the deal must be notified to the European Commission. The Commission reviews whether the transaction could reduce competition, limit consumer choice, or give the combined business an unfair advantage in the European market.

The review usually starts with a short preliminary phase. If the Commission sees no issues, approval is granted quickly. If the market is concentrated or the businesses overlap, the review becomes deeper and more detailed. The important point is that a transaction cannot close until this review is complete, so it often influences the timing of signing and closing.

National Merger Control in Member States

Not every deal is large enough to reach the EU level. When the EU thresholds are not met, individual member states can still require their own filings. Countries like France and Germany have active competition authorities that regularly examine cross border deals. Each country has its own thresholds and timelines, and some transactions require filings in multiple jurisdictions at the same time.

For certain industries, national financial, energy, telecom, or healthcare regulators may also have a role. This makes it important to map out all approval requirements before signing so that the deal timetable remains realistic.

GDPR and Data Protection Considerations

Any European company that handles customer, employee, or vendor data is bound by GDPR. This affects how parties run their due diligence. Sensitive information cannot be shared freely, and sellers often anonymise or limit access to personal data in the data room. Employee information and customer records are particularly protected.

After completion, the buyer becomes responsible for making sure the target complies with GDPR. This includes data security, data transfers, vendor contracts, consent processes, and breach reporting. Since penalties under GDPR can be significant, European sellers expect buyers to show a clear understanding of data protection from the start.

Foreign Investment Screening and Sector-Specific Approvals

Several EU countries run foreign investment screening processes to protect national security and critical sectors. These reviews apply when foreign investors acquire meaningful stakes in areas such as defence, energy, critical infrastructure, or certain advanced technology businesses. They do not apply to every deal, but when they do, they often run alongside competition filings and can extend the timeline.

Some sectors also have their own regulatory approvals. Banks, insurance companies, telecom operators, energy providers, and pharmaceutical businesses may need clearances from national regulators or European supervisory bodies. These requirements depend on the industry but can influence how the deal is structured.

Why These Layers Matter for India–EU Deals

The EU’s framework is thorough, but it is also predictable. The challenge is not complexity but coordination. Competition filings, GDPR rules, foreign investment reviews, and sector-specific approvals all operate on different timelines. If the parties identify these early, the deal moves smoothly. If they do not, the regulatory process can slow down signing or closing.

For India EU transactions, building the regulatory plan into the commercial strategy from the start is often the key to avoiding delays and keeping the deal on track.

HOW OTHER JURISDICTIONS COMPARE

Below is a simple jurisdiction-wise comparison that gives readers a quick snapshot of how cross border M&A rules operate in other major markets. The table keeps the focus on regulators, the primary law involved, and one practical point that often affects deal execution.

JURISDICTION

REGULATOR

PRIMARY LAW

SPECIAL CONSIDERATION

UAE

Ministry of Economy; Securities and Commodities Authority

Commercial Companies Law (Federal Decree-Law 32 of 2021)

Free Zone structures like DIFC and ADGM offer flexible M&A frameworks and English-law style courts.

USA

Federal Trade Commission (FTC); Department of Justice (DOJ)

Hart–Scott–Rodino Antitrust Act

Mandatory pre-merger notifications with strict enforcement and potential penalties for gun-jumping.

Australia

Australian Competition and Consumer Commission (ACCC)

Competition and Consumer Act, 2010

Foreign Investment Review Board (FIRB) approvals required for foreign acquirers across sensitive sectors.

CHALLENGES IN CROSS-BORDER M&A

Cross border deals between India and the EU look exciting on paper, but once parties get into the details, a different picture emerges. The legal work, cultural alignment, financial planning and regulatory timing all become moving parts that must be managed carefully. The challenges are not unusual, but they need early attention if the transaction is going to stay on track.

1. Conflicting competition rules

Competition laws do not work the same way across jurisdictions.

A deal that triggers a filing in India may not trigger a filing at the EU level, and the reverse is equally common. Even within Europe, individual member states may require their own filings. Each regulator works on its own timeline, so sequencing becomes a strategic exercise. If parties don’t plan this early, the deal can get delayed simply because one authority finishes later than expected.

2. Data protection and privacy hurdles

Data has become the most sensitive part of cross border transactions.

European companies follow GDPR, which is strict about what personal data can be shared and in what form. Indian acquirers are often surprised by how limited due diligence access can be. On the Indian side, the new DPDP Act creates its own rules on data processing and storage. Bringing these two frameworks together means diligence has to be designed carefully, often with redacted or anonymised information. This slows down review and creates room for misunderstanding if the parties are not aligned.

3. Exchange rate exposure and tax structure

Currency fluctuation is a real financial risk in India–EU deals.

Valuation may be agreed in euros, dollars, or rupees, and movement in any of these can affect the final purchase price. On top of that, tax outcomes differ widely across jurisdictions. Capital gains, withholding tax, transfer pricing, indirect taxes and the availability of treaty benefits can materially change the economics. If tax structuring is left for later, parties often face avoidable leakage or re-negotiations.

4. Cultural and negotiation differences

Indian and European companies often approach documentation, governance and negotiation styles differently.

European sellers usually expect highly detailed disclosures, strong compliance records and strict data room discipline. Indian buyers tend to move faster and can sometimes find the process more rigid than necessary. These differences are not obstacles but they require alignment. If not managed well, they create tension over drafting styles, timelines and even basic communication.

5. A few real examples that show these challenges in practice

Hindalco–Novelis

Hindalco’s acquisition of Novelis is a textbook example of how wide cross border deals can stretch. The transaction had to go through merger reviews in several countries, and each regulator looked at the aluminium market from a slightly different angle. Coordinating those filings and keeping the timelines aligned became a major piece of the deal. Once approvals were secured, Hindalco had to bring together two companies that had grown with very different management styles and global footprints. The integration work turned out to be just as complex as the regulatory side, which is often the case with large international acquisitions.

Zydus–Heinz India

The Zydus and Heinz India deal shows how operational details and tax planning can influence the structure of a consumer products acquisition. Heinz India owned popular brands that depended on a network of manufacturers, distributors and licensing arrangements. Zydus had to carefully review each of these contracts to make sure the brands would continue to reach the market without disruption. The deal also required close attention to tax treatment because it involved transferring brand rights, manufacturing assets and long term supply contracts. This is the kind of work that decides whether a takeover runs smoothly or starts with unexpected gaps.

Ola Electric acquiring UK technology assets

Ola Electric’s purchases of EV and battery technology companies in Europe are a good example of how detailed technology-driven deals can become. These companies held sensitive intellectual property, so Ola had to run thorough IP diligence and understand what parts of the technology could legally be transferred out of Europe. Export control rules, ongoing research agreements and patent portfolios needed close review. GDPR added another layer, so only limited employee or customer data could be shared during diligence. European sellers expect strong documentation standards, and Ola had to match those expectations before signing. The deals highlight how technology acquisitions demand both legal and technical clarity.

KEY TAKEAWAYS FOR INTERNATIONAL CLIENTS

Cross border deals work best when the groundwork is done early and the teams on both sides know exactly what to expect. These are the points that consistently make a difference in India–EU transactions:

1.    Treat due diligence as a two-country exercise, not two separate checklists.

The biggest gaps appear when teams assume Indian and EU compliance standards are interchangeable. A coordinated diligence plan avoids surprises and gives the deal a cleaner runway.

2.    Start with simple, well drafted NDAs and MoUs.

Early documents set the tone for the entire deal. When confidentiality, exclusivity, data access and governing law are clear, everything that follows becomes easier to negotiate.

3.    Identify merger filing triggers before you lock commercial terms.

CCI thresholds, EU Merger Regulation filings and individual member state notifications can reshape timelines. Knowing the filing path upfront helps avoid awkward renegotiations later.

4.    Design your data-sharing model around GDPR and the DPDP Act.

European sellers expect disciplined data handling. Indian buyers must be ready with anonymisation, access controls and compliant data rooms. Getting this right builds trust quickly.

5.    Bring in a cross border legal team early, not after signing.

Many deal delays come from sequencing errors across regulators. A team that understands India and Europe can map the entire approval path, structure the documents cleanly and keep closing on track.

CONCLUSION

Cross border M&A between India and the EU demands more than a strong commercial deal. It requires parties to think through how two very different regulatory systems, two competition regimes, two data protection frameworks and two corporate cultures will interact over the life of the transaction. What looks like a straightforward acquisition on a term sheet often becomes a sequence of filings, data-room adjustments, price discussions, tax modelling and negotiation styles that need to be aligned from the outset.

The deals that succeed are usually the ones where teams take the time to map out the regulatory path early. They understand which filings will influence the signing timeline, how GDPR and the DPDP Act will limit data access, where valuation can shift because of currency or tax rules, and how the Indian and European expectations on disclosures, warranties and compliance differ. Once these elements are clear, the rest of the transaction becomes far more predictable. Diligence becomes smoother, drafting becomes cleaner and closing stops depending on guesswork.

India–EU transactions are not difficult by nature. They simply reward preparation. When companies treat regulatory planning, cultural alignment and data governance as part of the strategy rather than an afterthought, the deal gains real momentum. For businesses looking to access new markets, technology and long-term stability, cross border M&A remains one of the most effective ways to build global strength.

FAQ SECTION

1. Is cross border M&A allowed under Indian law?

Yes. Cross border mergers and acquisitions are permitted under Sections 230 to 240 of the Companies Act, supported by FEMA regulations and subject to approvals from the RBI and the Competition Commission of India where required.

2. Does GDPR apply to an Indian company acquiring a European business?

Yes. If the European target processes the personal data of EU residents, GDPR obligations automatically extend to the buyer, even if the processing shifts outside the EU.

3. What documents are typically required for M&A due diligence?

Due diligence usually covers corporate records, financial statements, contracts, intellectual property documents, regulatory filings, tax records, employment files, litigation details and compliance certifications.

4. Do India–EU deals require filings in both regions?

Often yes. Large transactions may trigger merger control filings with the Competition Commission of India, the European Commission or individual EU member states. The filing path depends on thresholds and market overlap.

5. Can parties share employee or customer data freely during diligence?

No. GDPR restricts how personal data can be shared. Sensitive information usually requires anonymisation, redaction or controlled access within a secure data room.

6. Do foreign investment rules apply when a European buyer acquires an Indian company?

Yes. FEMA and RBI regulations govern valuation, sectoral caps, entry routes and reporting obligations. Approvals may be required in sensitive sectors like defence, telecom, insurance or financial services.

7. Can a deal be signed before all regulatory approvals are received?

Yes. Parties can sign the definitive agreements, but closing must remain conditional. They cannot integrate operations until all mandatory approvals are obtained.

8. Are cross border mergers into foreign jurisdictions permitted from India?

Yes. Outbound mergers are allowed if the foreign jurisdiction is on the RBI’s approved list and the merged entity follows Indian reporting, tax and compliance rules.

9. How long does a typical India–EU M&A transaction take?

Most transactions take four to seven months from signing to closing. Deals involving deeper competition review or sensitive sectors may take longer.

10. Are indemnities enforceable across borders?

Yes, provided the documents include clear governing law, arbitration provisions and enforcement mechanisms recognised by both jurisdictions.

ABOUT THE AUTHOR

Aman Patel is a corporate lawyer focusing on company law, commercial agreements, and compliance strategy. He advises on contract drafting, business structuring, and legal due diligence for growing companies. A graduate of Symbiosis Law School, Hyderabad (B.A. LL.B.), he contributes his practical experience to SolvLegal’s legal resources for professionals and businesses.

DISCLAIMER

The information provided in this article is for general educational purposes and does not constitute a legal advice. Readers are encouraged to seek professional counsel before acting on any information herein. SolvLegal and the author disclaim any liability arising from reliance on this content. Connect with SolvLegal on LinkedIn.