Mergers and Acquisitions by MNEs: Patterns and Implications Author(s): Nagesh Kumar Source: Economic and Political Weekly, Vol. 35, No. 32 (Aug. 5-11, 2000), pp. 2851-2858 Published by: Economic and Political Weekly Stable URL: http://www.jstor.org/stable/4409593 . Accessed: 20/05/2014 04:19
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The developmental implications of this trend need to be examined. This papermakes an exploratory attempt to map the recent M and A activity in the Indian corporate sector associated with foreign multinational enterprises (MNEs) andtheirIndianaffiliates. That is attempted with the help of an exclusive database built-upby us thatcovers most of the deals associated with MNEs in India for the period April 1993.to mid-February 2000. This databasehelps to examine the industrial composition of the deals as well as their motives. The structure of the paper is as follows. Section I briefly summarises the policy frameworkgoverning M and A activity. Section II examines the emerging patterns and motives of MNE related M and As in India. Section III discusses implications of the MNE related M and As for various parameters of development. Section IV concludes the paper with some remarks for policy.
The policy and regulatory framework governing the M and As has evolved over the 1990s. Before 1990, an open offer was
mandatory for acquiring 25 per cent stake in a company. In 1990, this threshold was reduced to 10 per cent of a company's capital. However, in case of MNE related acquisitions, provisions of the Foreign Exchange Regulation Act, 1973 (FERA) also