Cross-border mergers and acquisitions (M&A) between India and the UAE have surged as businesses in both jurisdictions seek new markets, technologies, and diversification avenues. However, these deals require navigating a sophisticated legal and regulatory landscape shaped by continual reform, policy priorities, and international best practices.
Drivers and Trends in India-UAE Cross-Border M&A
India and the UAE are natural trade partners, with M&A deals motivated by access to fast-growing consumer bases, proximity to Africa and Europe (from the UAE), and India’s robust digital, healthcare, and renewable sectors. Recent liberalization in both countries including UAE’s relaxation of foreign ownership restrictions and India’s opening to mergers has further catalyzed cross-border activity. In 2024-25, UAE M&A volume reached a record high, with over half of these transactions being cross-border, signaling strong investor appetite between both regions.
This blog is a part of our Why Indian Businesses Consider the UAE a Global Expansion Hub Blogpost.
Indian Legal Framework for Cross-Border M&A
India’s corporate law regime for cross-border M&A is defined by the Companies Act, 2013 (Section 234), FEMA regulations, the Competition Act, and sectoral regulations by authorities like SEBI and the RBI. The Companies Act allows mergers with select notified jurisdictions, which as of 2025, does not yet include the UAE, thereby restricting the direct legal route for India-UAE mergers. Approval by the National Company Law Tribunal (NCLT) and multiple regulators is compulsory, which adds to transaction costs and regulatory timelines.
Key Indian legal issues include:
- FEMA (Foreign Exchange Management Act) regulations on pricing, share swaps, capital account transactions, and sectoral caps.
- Multiplicity of regulatory approvals required from SEBI for listed entities, RBI for foreign exchange aspects, and the CCI for competition clearance.
- Taxation challenges, including capital gains, indirect transfer rules (notably after Vodafone), and lack of tax neutrality for cross-border mergers.
- Post-merger integration hurdles such as enforceability of foreign merger orders, recognition of foreign court judgments (limited to reciprocating territories), and sector-specific licensing requirements.
UAE Corporate Law Framework for M&A
The UAE’s M&A regime is shaped by progressive reforms through the Commercial Companies Law (Federal Decree-Law No. 32 of 2021) and new Competition Law (Federal Decree-Law No. 36 of 2023), supplemented by Cabinet Ministerial Decree No. 3 of 2025. These changes have modernized the regime by:
- Lifting most restrictions on foreign ownership, thus enabling Indian acquirers to own 100% equity in key sectors.
- Codifying merger procedures, requiring Merger Agreements and shareholder approvals aligned with international best practices.
- Implementing a mandatory, pre-closing merger control regime, now requiring clearance from the Ministry of Economy for transactions crossing specified turnover or market share thresholds.
- Imposing commercial penalties for non-notification and shifting to an “automatic rejection” of unaddressed notifications, thereby raising regulatory risks.
Major regulators include the Ministry of Economy (MoE), Securities and Commodities Authority (SCA), Central Bank (for financial sector deals), and local stock exchanges for public company transactions.
Typical Deal Structures and Procedural Challenges
Cross-border M&A between India and the UAE is typically structured via share purchases, asset purchases, or business transfers. Amalgamations or true mergers are rare due to the need for reciprocal legal recognition and complex, often non-harmonized procedures.
Major procedural hurdles include:
- The need for early antitrust analysis (especially under the UAE’s new competition law).
- Difficulties in aligning transaction documents and legal formalities between divergent systems.
- Delays and unpredictability in regulatory clearances on the Indian side—owing to sequential, non-integrated approvals from multiple agencies.
- Differences in accounting standards, treatment of intellectual property, HR regulations, and post-deal tax compliance.
- Restrictions on outbound mergers from India (permitted only with notified jurisdictions), limiting direct legal routes for India-UAE full mergers.
Tax, Valuation, and Integration Considerations
Taxation is a material concern: India does not provide full tax-neutrality for cross-border mergers, exposing parties to capital gains tax, indirect transfer rules (notably for global structures), and transfer pricing audits. Double Taxation Avoidance Agreements (DTAA) offer limited relief, but careful tax planning and documentation are essential.
On the UAE side, introduction of a 9% federal corporate tax, effective June 2023, requires Indian investors to budget for new corporate tax liabilities, including documentation and due diligence requirements for historic compliance.
Post-merger, further complexity arises when integrating IT systems, employee contracts, intellectual property, and ongoing compliance, especially where Indian and UAE corporate structures and sectoral rules diverge.
Policy Trends and Future Outlook
Both India and the UAE are taking steps to further liberalize their legal frameworks and expand the list of permissible cross-border merger jurisdictions. Calls abound for:
- India to reciprocally recognize more jurisdictions, including the UAE, under Section 234 of its Companies Act.
- Streamlining regulatory approvals—ideally adopting a “single-window” approach.
- Greater clarity in FEMA, SEBI, and RBI rules to support share swaps and flexible deal arrangements for international transactions.
- Deepening India-UAE tax treaty coverage and further removing indirect tax obstacles.
- Bilateral arrangements for automatic recognition and enforcement of merger orders.
Conclusion
India-UAE cross-border M&A offers immense strategic and financial opportunity but requires sophisticated legal, tax, and regulatory planning. Both jurisdictions are evolving to accommodate global best practices, though practical hurdles, particularly in India’s outward merger regime and regulatory coordination, still limit deal-making efficiency. Continued legislative reform and stronger bilateral mechanisms will be key to unlocking the next wave of India-UAE cross-border growth.
