5 October , 2021 Fdiindia
India, Germany to See Growth in M&A Space Driven by IT, Auto, Pharma Sectors
Software and services, automotives, pharmaceuticals, and capital goods are likely to keep the momentum continuing in the mergers and acquisitions sector between India and Germany as the global economy recovers from the ravages of covid-19, according to a research.
“The bureaucracy, a complicated legal and regulatory framework, and a lack of sufficient infrastructure are the greatest perceived obstacles for investors in the Indian economy,” says the report "According to the findings of the research.
On the other hand, “aside from the high cost of entry, one of the most important difficulties Indian investors face in entering the German market is considerable rivalry coming from a well-developed and structured ecosystem,” according to the report "It was said. “In order to thrive in this competitive environment, new investors must be able to modify their company strategies and offerings,” says the report "It was said.
The report was published by Germany's Ebner Stolz, an independent consultancy firm ranked as the top service provider for mid-sized companies, and India's Nexdigm, which is also an independent global business advisory provider, and looks at merger and acquisition activity among German and Indian companies over the last decade (2011-2020). It comes as India and Germany celebrate 70 years of diplomatic relations.
According to the study, 1,800 German businesses are engaged in India, while more than 200 Indian enterprises have a presence in Germany. There were 171 mergers and acquisitions between Indian and German businesses between 2011 and 2020. According to the report, bilateral trade in 2019-20 was $22 billion.
“After a setback in 2020, both Germany and India's economies are projected to rebound strongly in 2021, with GDP growth rates of 3.7 percent and 9.5 percent, respectively ""Respectively," the study said.
“The slowdown in cross-border agreements is anticipated to be offset by the reopening of dialogues in- stalled transactions, as well as increased rigour in new deals,” says the report "The four industries listed as driving deal activity in the next several years, according to the report.
Given the emphasis on distancing standards imposed during the epidemic, software and services were expected to perform well. As a result, the focus on e-health, e-education, e-commerce, artificial intelligence, and automation is only likely to grow, according to the report. According to the study, other areas in IT that would drive transaction activity include cloud adoption and data security.
“The shift to hybrid and electric cars, as well as technical advancements (such as lightweight materials), will boost partnerships and investments in the automotive sector,” says the report "It was said.
“The simplification of supply chains and the creation of specialty medicines are anticipated to increase FDI, or foreign direct investment, in the pharmaceutical industry,” says the report "It was said. “In the near future, (Indian and German) businesses would seek to contract research and production agreements in addition to acquisitions and joint ventures,” says the report "It was said.
“Increased expenditures in green products and sustainability are anticipated to fuel development in the capital goods and materials category,” says the report "It was said.
“The Indian government is actively promoting electric mobility and renewable energy, which will most likely witness positive advances in the near future "According to the study.