US reciprocal tariffs, market volatility cast shadow on India's M&A scene

Bankers say several big-ticket deals now on pause as buyers seek time to navigate valuation fog

US President Donald Trump's flip-flop on reciprocal tariffs coupled with heightened market volatility is delaying major acquisitions in India as potential buyers are seeking more time for due diligence.

 

Bankers say several high-profile deals, including those involving sale of AkzoNobel India, Novartis India, and HDB Financial Services, are now on pause as buyers seek more time to navigate the valuation fog.

 

The turbulence stems in part from the White House’s tariff tantrums, which have raised questions around supply chains, cost structures, and, crucially, valuations. While most investors regard the US tariffs as short-term political theatre, the volatility they have unleashed is proving harder to shrug off. The sharp correction in Indian equities has prompted suitors to reassess the numbers or walk away altogether.

 

“Country-specific tariffs are complicating the mergers & acquisitions (M&A) landscape,” says Prashant Bhojwani, partner at BDO India. He notes that due diligence now includes fresh scrutiny of supply chains and forex exposure, adding, “Valuations are being recalibrated, and deals could be delayed.”

 

Offers for AkzoNobel India, a subsidiary of the Dutch coatings giant, are said to be with the seller, but private equity players are hesitant to pull the trigger. “In today’s environment, due diligence has shifted from verification to valuation stress-testing,” says Binoy Parikh, partner of Katalyst Advisors. “Between Trump’s tariff flip-flops, gyrating markets, and forex swings, the exit math just doesn’t add up,” he adds. 

 

AkzoNobel India’s share price has shed 23.4 per cent since last September, closing on Wednesday at ₹3,336. One Indian bidder has already ruled out a premium offer given current market jitters. Novartis India, meanwhile, appears to have been quietly pulled from the auction block. The Swiss parent, which owns 71 per cent of the firm, was gauging interest from domestic players. But with the stock also down 24.9 per cent since September, enthusiasm has cooled. Emails to AkzoNobel and Novartis AG went unanswered; HDFC Bank declined to comment on the sale of its stake in HDB Financial.

 

The deals may yet materialise, but for now, they are hostage to a tariff-happy presidency, skittish markets, and the capricious moods of global capital. In the coming months, experts say, the technology sector may attract interest in areas like artificial intelligence (AI), fintech, healthcare technology, and ongoing digital transformation.

 

“At the same time, the growing focus on renewables and sustainability highlights investor priorities are aligned with India’s trajectory toward innovation and sustainable solutions. The slowdown in IPO activity — driven by market volatility and valuation concerns — combined with the anticipated decline in interest rates in 2025, is expected to create a favourable environment for private equity and venture capital investments and opportunities,” says Elaine Tan, senior manager, LSEG Deals Intelligence.

 

(With inputs from Sohini Das)