Nothing to Do with India? Why Global M&A Deals Now Need an India Merger-Control Check
Take the recent case of the Australian coal mine acquisition between two Australian companies neither having any physical presence in India – why on earth should the competition lawyers check India? They had to because the value of the acquisition of the Australian coal asset exceeded the threshold of Rs. 20 billion (@ €180–185M at current exchange rates) and because a downstream entity of the target sold metallurgical coal in India. The Competition Commission of India (CCI)’s August 25, 2026 Order notes that the only nexus of either the Acquirer or the Target in India, including their affiliates, was only the export of coal to India by downstream subsidiaries. Neither party nor their affiliates/subsidiaries had any physical presence in India.
€183M Red Flag
The first trigger warranting the “India check” was that the acquisition of Kestrel Coal Group by Yancoal Australia Ltd. for US$ 2.4 billion exceeded the Rs. 20 billion (@ €180–185M) Deal Value Threshold (DVT). The DVT is an independent jurisdictional threshold. The traditional asset/turnover analysis is no longer enough, and the de minimis target exemption does not rescue a transaction that independently meets the DVT.
The first trigger warranted the second “India check”: whether the exports of coal by a downstream entity amounted to Substantial Business Operations (SBO) in India. The CCI’s Order does not explain how the Target’s exports to India constituted SBO warranting the notification in the first place. The CCI approved the transaction considering that even the combined market share of the exports of both the Target and Acquirer in the relevant broader and narrower market for coal in India was only 0-5% by volume.
Merger-Screen Methodology
For the international M&A lawyer who asks, ok how do I know if I have an Indian competition law notification issue, the following India merger-control screen methodology can be applied. First, determine the total transaction value including contingent/deferred consideration and see if it exceeds the DVT of Rs. 20 billion. If it does, the second step is to identify what constitutes the target enterprise/business, then calculate whether that target has an SBO in India. For a non-digital services business, examine whether Indian turnover in the preceding financial year, or Indian Gross Merchandise Value (GMV) during the twelve months preceding the relevant date, exceeds ₹5 billion (@€46M at current exchange rates) and represents at least 10% of global turnover or GMV, respectively. Importantly, examine the target perimeter, including downstream entities, instead of only asking whether the immediate acquisition vehicle has an Indian subsidiary.
Thus foreign deals which, on their face appear completely unrelated to India, can trigger a CCI notification requirement if they meet the DVT of Rs. 20 billion (@€180–185M), which is relatively moderate by international M&A standards, and the Target has Indian turnover or GMV exceeding approximately €46M and representing at least 10% of its corresponding global figure. Exports of €46M to India are a relatively moderate level from an international perspective and many global companies may meet the 10% threshold of Indian GMV or turnover. These thresholds mean that a number of mid to high range international deals involving non-digital services businesses will require counsel to run an India-check.
From Turnover/GMV to Users
For targets whose business is providing ‘digital services’, however, the ₹5 billion (@€46M) monetary floor applicable to turnover and GMV disappears. There is also a separate user-based route to SBO: the test is met if the number of business users or end users in India is 10% or more of the target’s total global number of such users.
Digital businesses capable of supporting transaction values around the DVT of Rs. 20 billion need not have tens of millions of users. For example, a cloud based electric-vehicle charging software business or an HR software company purchased for a price around the DVT may have one million users. The number of users may be even smaller for enterprise software companies sold for a price around the DVT; they may have only 300,000 end users. Ten percent of these user bases is 30,000 to 100,000 Indian users. In a country with more than a billion internet users, 30,000 or 100,000 Indian users is hardly evidence that India is either central to the target’s business or that competition in India could be affected by the M&A operation. Yet those user numbers are sufficient to constitute SBO and trigger a notification requirement under India’s competition law.
For conventional businesses, the SBO test generally requires India to be a genuinely significant part of the target’s worldwide business. For digital services businesses, the same cannot necessarily be said. A relatively small Indian user base can constitute 10% of the users of a mid-sized global digital services business and bring an otherwise wholly India un-related foreign transaction within India’s notification regime. There is, moreover, an interesting legislative-history point behind it: the CCI accepted the objection that 10% by itself could be insufficiently “substantial” for turnover and GMV, and added an absolute floor – yet left the digital-user test without one.
The striking fact pattern is: Australian company buys Australian assets and an Australian company. Neither Acquirer nor Target nor its perimeter/downstream entities have any physical presence in India. Yet a notification in India is required because a downstream entity, in which the Target holds an 80% interest, sells coal into India. For every global transaction above ₹20 billion (@ €180–185M), counsel should ask a second question before concluding that India is irrelevant: does the target or its perimeter satisfy India’s SBO test?
Aparna Viswanathan
Managing Partner
Viswanathan & Co., Advocates
https://www.linkedin.com/pulse/nothing-do-india-why-global-ma-deals-now-need-check-viswanathan-csute
