Factors determining inbound and outbound m&a in an industry in India

Abstract

There is an increasing trend in outward and inward FDI from India and in India over last one decade. It is interesting to observe that some industries have attracted more inward and outward FDI as compared to others. This paper is an attempt to look at the industry level factors that determine the inward and outward FDI in an industry. We measure FDI with number of M&A deals in that industry in that year. The findings of the paper suggest that capital intensity of the industry has a positive impact on outbound M&A in that industry; however import growth rate and domestic growth rate did not have any impact on outbound M&A. Similarly, import growth rate is positively related to inbound M&A as per our expectations; however domestic growth rate and capital intensity had no impact on inbound M&A.