Indicating renewed M&A interest, Indian companies struck as many as 38 deals worth over USD 1.1 billion in the US in 2014 after a lull in the preceding year, according to a FICCI-EY report released ahead of US President Barack Obama's visit to India.
Around 20 Indian firms had signed merger and acquisition (M&A) deals in the US in 2013 while one-fourth of the total 268 outbound acquisitions were made in the US between October 2013 and December 2014, the report said.
"To foster a positive investment environment further, a Bilateral Investment Treaty (BIT) can provide confidence and protection to investors from any discriminatory measures," it added.
Negotiations on the BIT between India and the US are on. The treaty, aimed at fostering investment opportunities, is expected to improve transparency and predictability for investors and support economic growth and job creation in both the countries, it added.
Ahead of the US President's visit to India, the report said "time is opportune for US companies to scale up their engagement with Indian businesses."
Among 38 M&A deals struck in 2014, the major ones were - USD 240 million deal between Tech Mahindra and Lightbright Communications Corp and USD 232.5 million pact between Aurobindo Pharma USA Inc and Natrol Inc.
The report added that the US' share in India's total outward FDI has increased to 7.8 per cent in 2014 from 5.5 per cent in 2009.
For example, Reliance Industries' investment in its shale gas joint ventures saw a whooping increase of approximately USD 900 million from January 2014 to December 2014.
The Essar Group is also constructing a USD 1.6 billion iron ore-pelletising greenfield project in northeast Minnesota, it added.
India's outward FDI chart shows that it has remained consistent over the years.
However, the actual investments by Indian companies in the US would be higher as the figures do not include investments through other countries.
Going forward, the report said that coal, steel and oil & gas sectors are likely to drive deal values in near future since Indian players are looking for quality raw material.
"The deal pipeline already seems to be very prominent, given that India's major state-run and private players are either holding talks or have readied huge corpuses to acquire assets in the US," it said.
On the other hand, pharmaceutical and healthcare sectors are likely to drive deal volumes, riding on upcoming generic opportunities and the size of the US market.
Traditional segments such as business process outsourcing (BPO) and upcoming segments such as data analytics and cloud computing are likely to be under focus, it added.