"We expect the long-term trend of outbound expansion to remain intact, driven by structural factors, including China+1 supply chain shifts, export opportunities from free trade agreements, and the need to be closer to customers and markets," Sharma told Business Standard in an interview.
While some cross-border acquisitions could be "recalibrated in the near term" because of evolving market conditions and geopolitical risks, the underlying appetite for international expansion remains strong, Sharma said. He expects more acquisitions aimed at securing capabilities in AI, deep-tech, and semiconductors, particularly by IT services firms and fintechs, alongside policy tailwinds such as Make in India and FTAs that lower barriers to entry and create opportunities to build global brands and supply chains.
Indian companies completed 56 outbound M&A transactions worth $3.9 billion in the first quarter of 2026, the highest quarterly outbound deal volume on record, according to industry data cited by Sharma. Activity accelerated further in April, with companies announcing 103 M&A transactions worth $18.7 billion — the strongest monthly performance since May 2022.
Among the largest outbound deals this year was Sun Pharmaceutical's $11.75 billion acquisition of US-based Organon & Co., announced in April.
"This momentum has continued through 2026, supported by strong corporate balance sheets, increasing globalisation, AI- and technology-led expansion, and supply chain diversification. The market is expected to remain focused on strategic capability-driven acquisitions over purely scale-driven transactions," Sharma said.
The United States remains the preferred overseas destination for Indian mid-market companies, followed by the United Kingdom and Europe, where recently concluded FTAs are creating new opportunities. Interest is also rising in Saudi Arabia and the broader Gulf Cooperation Council (GCC) region, supported by infrastructure investment and economic diversification programmes. Companies are also exploring Southeast Asian markets such as Thailand and Indonesia, as well as Latin America.
Sharma said outbound activity is spread across a broad range of sectors, reflecting the growing global ambitions of Indian companies. The most active sectors include technology and IT services, industrials and automotive, pharmaceuticals and life sciences, chemicals, manufacturing, and electronics manufacturing services (EMS). Indian companies are increasingly using overseas acquisitions as strategic tools for capability building, technology integration, and global market access.
On financing, Sharma said companies now have access to a wider range of funding options, including foreign currency term loans through overseas subsidiaries backed by guarantees from the Indian parent, external commercial borrowings (ECBs), overseas bond issuances, and revolving credit facilities. He added that the Reserve Bank of India's framework permitting rupee financing for eligible overseas acquisitions has further expanded financing options.
"The recent RBI guidelines have further expanded the options by permitting rupee financing for eligible acquisitions, such as the recent Waaree Renewable Technologies Ltd transaction, providing companies with greater flexibility when structuring cross-border transactions," he said.
Sharma said overseas expansion is unlikely to come at the expense of domestic investment. "We do not see this coming at the expense of domestic private capex," he said, adding that India's domestic market continues to offer significant growth opportunities and companies will need to continue investing in local manufacturing capacity, infrastructure, and capabilities to meet rising demand.
 "Ajay Sharma, Managing Director and Head of Banking at HSBC India")